India’s economic growth forecast for the fiscal year 2021-22 has now come down slightly to 8.7% from 8.9% announced in February, according to data released by the statistics ministry on Tuesday. On the basis that COVID shrank by 6.6% in 2020-21, this would still mean an economy that is slightly larger than its pre-pandemic size in real terms. That in itself is a relief. We would have performed better if the harsh effects of the Omicron and Ukraine war had not dampened our recovery, which would have helped us achieve the expansion pegged at just 4.1% in the quarter ended March 31.
With two years lost in the pandemic, we need to climb the fast growth path again. This calls for a spring-back not only from Covid, but also from the slowdown that started almost five years ago and led to a sub-4% expansion in 2019-20. While there has been a major financial and monetary push, we also face the adverse effects of relief measures taken globally. We may not be headed for a recession, but price volatility is a major threat and lending rates may need to rise sharply. This year’s budget strategy to spur a major revival of private investment faces new hurdles as stimulus efforts begin to ramp up around the world.