India: Recovery amid a rising state of dichotomy

April 2021

After having battled one of the biggest recessions it faced in recent memory, there was some cheer for India’s economy that recorded a positive—albeit marginal—growth in Q3 FY 2021. Till recently, economic activity seemed to be gathering momentum at a sustainable pace with people demonstrating greater confidence in stepping out and spending. The vaccination drive has made good progress too; over 132 million people (at the time of writing this article)—mostly from the vulnerable segment of the population—have been inoculated in a span of three months.

Of course, the recent spike in infection and the imminent threat of variants cast a cloud of doubts. Mobility restrictions that hurt the economy the most, are being imposed back (although in a calibrated manner) by a few States. While it is easy to lose hope in tough times, similar experiences around the world provide some comfort. Much the same way the United States witnessed a sharp increase in infection rates during the second wave (starting November) yet experienced economic impact that was relatively low compared to the first wave, we expect the economic and health impact of the subsequent waves in India to be contained to a quarter or two.

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