India’s economy faced a serious downturn since the imposition of nationwide lockdown and continuous restrictions on movement when unlocking began in series. However, as soon as things started opening up, the market got the much-needed business traction and things started moving towards normalcy. When most of the sectors started making profits after months of loss-making, the recent surge in infection cases due to the spread of the mutant deadly virus, the economy is once again surrounded with loads of uncertainties. Vice-Chairman of GVK Group, GV Sanjay Reddy has said that the road towards a higher growth rate will be bumpy, but the Indian economy is going to thrive due to the active policy interventions of the present regime.
The IMF and its recent report
The International Monetary Fund (IMF) has recently released the World Economic Outlook (WEO): Managing Divergent Recoveries where, it has said that India is expected to grow at 12.5 percent during FY2021-22, eventually settling at 6.9 percent in the next fiscal year. “The report is based on data before the recent surge in Covid-19 cases as many IMF officials have suggested. Consequently, we might see some adverse impact on the growth rate, but with the active role played by the government and the RBI, the growth rate is expected to sustain to an extent what IMF had suggested,” he said.
Aviation, hospitality, and construction for rapid growth
GV Sanjay Reddy identified three core sectors that can become a catalyst of rapid growth amid such adverse situations. “With continued restrictions on movement, aviation and hospitality continue to suffer throughout the past year. Almost all the major airlines are continuously making losses since the outbreak of the pandemic and only god knows how many medium and small players in the hospitality industry have perished,” said GV Sanjay Reddy.
“Now, if we want to sustain a higher growth rate, policy interventions at a greater level are required by the government to boost aviation and hospitality,” he added. The loss of around INR 240 to 270 billion for aviation in the first quarter of the last fiscal year as estimated by CAPA, reflects the dire situation for the sector. For hospitality, ICRA estimated a contraction of almost 65 percent during FY2021-22. Moreover, JLL India reported a decline of 84 percent in hotel investment trading volume recently.
The construction sector, on the other hand, which accounts for almost 8 percent of the Indian GDP, has incurred a loss of INR 30,000 crore every day during the lockdown. Moreover, the investment in construction is expected to further shrink from 13 to 30 percent amid the pandemic. “Construction sector provides jobs to over 5 crore Indians. A shortage of migrant labour and continued restrictions on travel have impacted the continuity in the construction business. The government is actively investing in the infra sector these days, a comprehensive policy must be formed to support the private construction sector as well,” said GV Sanjay Reddy.
Rolling out Covid-19 vaccine
“The recent surge in Covid-19 cases has been seriously hurting the market sentiments. We must focus on rolling out Covid-19 vaccines at a faster pace, as it is the only viable solution to the virus problem. Moreover, I would also advise implementing a comprehensive vaccination program to vaccinate a major proportion of the population within few months. Vaccination programmes will help to strengthen the market sentiments, will enable people to move that will eventually help aviation, hospitality, and construction businesses across India amongst other industries,” he said.
GV Sanjay Reddy is an eminent entrepreneur and seasoned market analyst. He is known for his divergent ideas and advanced business techniques.