In Charts: Early Data Suggests A Good Beginning For The Indian Economy In 2021
Jan 19 2021, 8:50 AM
January 19 2021, 8:50 AM
January 19 2021, 8:50 AM
Economic activity in India had held up well after the festive boost, kicking off 2021 at a pace comparable with the last few months.Positive pandemic-related developments â both, on cases and vaccination â are helping clear the decks for a faster pace of economic normalisation, said a research note by Nomura dated Jan. 18, 2020. Aggregate demand is fast catching up with aggregate supply and GDP growth is likely to return to positive .
Economic activity in India had held up well after the festive boost, kicking off 2021 at a pace comparable with the last few months.
Will work-from-home give a boost to female employment?
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In India, working from home could finally reverse the dramatic crash in the female labour-force participation rate (FLPR). In rich countries, two thirds of women above the age of 15 work, increasing incomes and living standards. In every Asian miracle economy, a rising FLPR enabled GDP growth to exceed 7%.
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In urban areas, the FLPR has always been among the lowest in the world at around 16%.
The Covid pandemic will change the world permanently in many ways. Most obviously, people will increasingly work from home. Workplaces will not disappear, but an increasing share of work will be done at home.
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OME PEOPLE have almost all the luck. Over the past year, as India’s economy has shrunk by around a tenth and tens of millions of Indians have lost jobs or sunk into poverty, the fortunes of the country’s two richest people have swollen. Gautam Adani, whose conglomerate sprawls from ports to coal mines to food, has seen his personal wealth more than double, to some $32bn. Mukesh Ambani’s riches, which derive from oil refining, telecoms and retail, among other things, have grown by just 25%, albeit to an intimidating $75bn or so.
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But the astonishing 21 per cent 3Q quarterly growth is also not something one should take much comfort in. If the level of GDP was 100 in 1Q, then it fell to 75 in 2Q and recovered to about 92 last quarter, it is still about 8 per cent lower than the level in 1Q20. In fact, we expect GDP growth in FY22 to recover to 12 per cent from -9 per cent in FY21, which implies that six quarters from now it will still be about 7 per cent below the pre-pandemic path, or roughly $300-billion-a-year of income losses across two years, compared to the pre-pandemic path. Imagine the havoc this can wreak to household and SME balance sheets, to income inequality, to poverty, and to women’s employment, since much of the economic shock has been borne by services, where female employment is much higher than in manufacturing.