The second wave of COVID-19 in poses a downside risk to economic activity in India in the first quarter of FY22, the finance ministry has said in its Monthly Economic Review Report for April 2021.
But the government still expects a “muted economic impact” of the second wave compared to the first, it said.
India was on the recovery path after two successive quarters of de-growth last year. The GDP had contracted by a massive 23.9 per cent in the June quarter following the national lockdown and by 7.5 per cent during the September quarter. India thereafter stepped out of recession, with the GDP growing 0.4 per cent in the December quarter.
But the onset of the second wave, which has witnessed a higher caseload, with new peaks of daily infections and deaths, last month checked the momentum in recovery.
“Learning to operate with COVID-19, as borne by international experience, provides a silver lining of economic resilience amidst the second waves,” the ministry said.
Recently, Goldman Sachs lowered its estimate for India’s economic growth to 11.1 per cent in fiscal year to March 31, 2022.
Agriculture is one sector that stands out amid the COVID gloom, with record foodgrain production estimated in the ensuing crop year on the back of predicted normal monsoons. India is set to have the third consecutive normal monsoon this year, with the India Meteorological Department predicting a normal southwest monsoon in the June-September period.