A number of noted economists have expressed doubts over the revival of the Indian economy in the next fiscal year. They argue that it will not be easy to turn the economy around, especially when the extent of contraction touched as high as 23.5 percent in the first quarter of the ongoing fiscal. Though the rate of contraction came down to below eight per cent, these economists claim that Indian economy is already in recession and it will take years for the economy to be on track once again. In support of their arguments, it was highlighted that well before the pandemic hit economic activities all over the world, the Indian economy was already in stagflation. There was virtually no demand in the market and job creation was completely halted. Export was dwindling and the primary sector of the economy registered lower growth rates. Citing all these examples, they stressed that there was no quick fix remedy available for the ailing economy and India would have to face hardships in coming days.
However, the economists who are skeptical about the revival of Indian economy, have failed to judge its resilient nature. In the case of Indian economy, the unorganised sector is substantial in size and it contributes largely to economic growth. This sector has its own survival instinct which experts often overlook. So, what is applicable to the organised sector is not applicable for the unorganised sector. This is why after the relaxation of lockdown norms, economic activities are picking up and the majority of India’s workforce have found employment once again. Moreover, to prove that the recovery is on track, the CMIE employment rate which is a credible indicator of the economy is indicating favourable change. The most important indicator is that during the second quarter of the fiscal, government spending was comparatively much less. So, the rate of contraction dropped despite the government’s intervention, which is a good sign for the economy. A lot is being said about the contraction during the first quarter, but, one should not forget that virtually all economic activities were halted during that period due to nationwide lockdown. As a result, the economy could not grow as much as expected in the last fiscal.
Now, economic indicators are showing signs that Indian economy is gradually reverting to 2019 levels. If the rate of recovery continues to show such signs, the economy is expected to achieve nearly double-digit growth rate. Though it registered a negative growth, the second quarter of the ongoing fiscal has provided new hope. It has once again proven that Indian economy has an in-built adaptability to withstand recession. It may be mentioned here that during the 2008 worldwide economic crisis, India remained mostly unaffected due to this resilience power. So, one can expect, the pandemic too will not be able to make as deep a dent in Indian economy as it has to other economies.