India into the light, but with overcast skies

The economy has witnessed a steady recovery to date, but the downside risks continue to weigh on the outlook. The latest surge in infection has increased uncertainties. However, we believe that growth will likely remain stronger because of the relatively milder impact of this wave on health and the economy, and the improving economic fundamentals.

We have updated our economic forecast for this and the next two fiscal years in our latest report Our latest projections suggest that the economy will grow somewhere between 8.7 percent and 9.4 percent in FY2021–22. What is undeniable is that successive waves will result in an uneven recovery, with some sectors facing structural challenges. Uncertainty will weigh on the rebound of the services industry with the hospitality, leisure, travel, and entertainment sectors witnessing gradual recovery because of calibrated intermittent localised lockdowns.

We have also penned down our expectations from the upcoming budget as we anticipate the government to ensure efficient implementation of the government policies and reforms. The government will do what it takes to support the virtuous cycle of pent-up demand, private investments, and jobs. The government has already initiated efforts to integrate planning and implementation of projects (in this case, infrastructure), with a focus on expediting works on the ground, saving costs, and creating jobs.