Let’s admit, India’s economy didn’t hit as bad as it was affected in 2020. The sudden arrival of the first wave of the COVID-19 pandemic caused massive disruption at every level. As nobody was prepared for this unforeseen arrival, many businesses shut permanently. Uday Kotak, CEO of Kotak bank, said, “there are two ways by which COVID has hit the business sector of India.
First, businesses whose working manner is no longer viable as the second wave dismantled its working completely. Second, those businesses which have temporarily halted their working as lockdowns and restrictions are imposed in the several states. The first category can’t undo its damage, and hence, needs maximum assistance from the government in the form of financial aid.”
PM Modi imposed a nationwide lockdown in March the previous year, which continued till mid-may. When the cases started to stabilize, the unlock process was implemented and various restrictions lifted. The F&B and nightlife industry started working ordinarily but with COVID-19 protocols like wearing masks, sanitizing hands, temperature check, social distancing, etc. But as the second wave arrived, the cases and deaths started increasing exponentially, the government allowed only take-away and home delivery options. This has affected the businesses as a very less number of people prefer to eat outside food as they fear catching the pernicious virus.
RBI: Indian economy comparatively stable as compared to 2020
The Reserve Bank of India said that India’s economy has not hit as moderate as it was during the first wave of COVID-19 during 2020. But the uncertainties and arrival of the second wave will act as a deterrent in the short term. India’s economic growth aspects now entirely depend on how fast the country will recover from the second wave of COVID.
The annual report by the Central bank has also mentioned the importance of the recovery in the second wave to re-establish the economy. “The economic recovery in Covid-19 will be heavily dependent on a strong private sector regeneration that will not lead to short-term use but will require accelerated investment to recover,” the central bank said in its annual report.
Various reforms and growth measures will help to expand India’s economy on a sustainable basis. The central bank has mentioned that the previous year’s economic downfall has left 2021’s economy stumbles. “Even though there is an announcement of vaccination drive, optimistic moves by the Indian government, the economic growth for FY21-22 continues to suffer as the lockdowns in several states are still prevalent,” the central bank annual report mentioned.
“The onset of the second wave created an explosion of growth estimates, according to the Reserve Bank’s 10.5 percent target for 2021-22 – 26.2% in Q1, 8.3% in Q2, 5.4 percent in Q3, and 6.2% in Q4,” he said. it said.
The RBI also emphasized the importance of fighting against the pandemic collectively. “If the countries work together against the virus, then it will surely bring good results than the countries who are fighting solo.” It also mentioned that inflation will remain within the target with the main motive of supportive growth, with the introduction of monetary policies in the macroeconomic conditions.
The reports apprised the stretch in medical health infrastructure and its over-exhaustion, as the second wave of COVID led to an overflowing number of cases. The reports also mentioned the major FY21-22 indicators that will lead to a slowdown in tax revenues and higher government expenditure. “Going forward, as economic growth recovers and the economy recovers, it is important for the government to follow a clear strategy to come out and create financial solutions, which can be used in the event of future shocking developments,” the RBI said.