Asia’s second most populated country, India, has reportedly fallen into recession. This becomes the first recession that India experiences in nearly a quarter of a century. Several advances have been done to relieve the COVID-19 pandemic and its effect on the country’s economy. Unfortunately, India still fails to hold off recession.
COVID-19 hits India hard, recession becomes unavoidable
Shilan Shah of Capital Economics mentioned that the lack of fiscal help on the crisis has contributed to a sharp fall in government consumption. Though loosened lockdown brings growth in the manufacture, the services sector falls into decline for the second time. CNN noted that official data announced on Friday reported a 7.5% downfall in gross domestic product from July to September in comparison to the same period last year. Previously, India recorded a deeper dive of nearly 24% in GDP for April to June.
India itself has loosened lockdowns as an attempt to generate economic recovery. Quoted from CNN, the Indian Ministry of Statistic said through a statement that, “with a view to contain the spread of the Covid-19 pandemic, restrictions were imposed on the economic activities not deemed essential during [the first quarter].” The statement further continued with: “though the restrictions have been gradually lifted, there has been an impact on the economic activities.”
India’s economic growth in the future relies on COVID-19 mitigation
COVID-19 pandemic is currently India’s main concern. Hence, the future of India’s economic recovery is closely related to AstraZeneca‘s vaccine result. India is one of the countries that hold the largest orders, and plans to locally produce the vaccine is on hand. However, AstraZeneca’s lack of clarity in its vaccine trials data signals for a delay in regulatory approval. Furthermore, vaccine distribution in India is an issue that has been questioned upon for some time.
Noted from CNN, Shah mentioned that, “under these circumstances, monetary policy is likely to remain very loose for the foreseeable future, and we think markets are too hawkish in expecting modest rate hikes in 2022.”