IMPACT OF COVID-19 IN THE GROWTH OF INDIAN ECONOMY IN THE FINANCIAL YEAR 2021-2022

The global economy remains hostage to heightened uncertainty, with Omicron sparking fresh containment measures. The Indian economy bounced back strongly in 2021-22, with GDP surpassing its pre-pandemic levels, and inflation broadly aligning with the target. A host of incoming high frequency indicators are looking upbeat and consumer confidence is gradually returning. Aggregate demand conditions point to sustained recovery, albeit, with some signs of sequential moderation. On the supply front, farm sector situation remains strong with impressive progress of Rabi sowing, while the manufacturing and services record strong improvement on strengthening demand conditions and surge in new business.The Indian economy manoeuvred choppy waters amid the Covid-19 pandemic, its nascent recovery hampered by a demand-supply mismatch while being among the fastest-growing economies in 2021.India began 2021 with high hopes buoyed by vaccine optimism only to be bogged down by the disastrous Delta variant-led second wave. But recovery ensued as things stabilised. Right when the global economy seemed to be at the cusp of witnessing green shoots of recovery after leaving the worst of the COVID-19 pandemic behind (despite uncertainties associated with subsequent waves of infection and rising global inflationary pressures), the Russia-Ukraine crisis escalated. Consequently, prices of crude oil and gas, food grains such as wheat and corn, and several other commodities have shot up. But since then, the gross domestic product (GDP) has been clawing its way back. Repeated waves of infection, supply-chain disruptions and, more recently, inflation have created particularly challenging times for policy-making. Faced with these challenges, the Government of India’s immediate response was a bouquet of safety-nets to cushion the impact on vulnerable sections of society and the business sector. It next pushed through a significant increase in capital expenditure on infrastructure to build back medium-term demand as well as aggressively implemented supply-side measures to prepare the economy for a sustained long-term expansion. But a second Covid wave upset all calculations. This article mainly focuses on some of the inevitable factors that determine the shape of the Indian Economy in 2021-22 viz., Demand of the consumers, Fiscal policies, Inflation, Investments and exports & imports.