In the second quarter of the financial year 2021-22, India achieved full recovery of pre-pandemic output levels, according to the Ministry of Finance’s monthly economic review report from November 2021.
According to the report, real GDP increased by 8.4% YoY in the second quarter of the current fiscal year, recovering more than 100% of pre-pandemic output in the corresponding quarter of FY 2019-20.
According to the report, India is one of the few countries that has grown for four consecutive quarters during COVID-19. It said the country grew in the third and fourth quarters of FY21 and the first and second quarters of FY22, demonstrating the Indian economy’s resilience. “A revival in services, full recovery in manufacturing, and sustained growth in agriculture sectors drove the recovery,” according to the report. “Kick-starting of the investment cycle,” it said, “supported by surging vaccination coverage and efficient economic management activating the macro and micro drivers of growth.”
Exports and investment both increased by over 17 percent and 1.5 percent over pre-pandemic levels, respectively, driving economic recovery on the demand side. The economy’s macro growth driver emerged as private consumption, which increased from 88 percent in the first quarter to 96 percent in the second.
Manufacturing and construction sectors aided agriculture in driving growth on the supply side. The manufacturing and construction industries both outperformed pre-pandemic levels.
“As contact-based services overcame the fear of the pandemic, GVA in trade, hotel, and communication services sharply improved from a pre-andemic recovery rate of 70% in Q1 to 90% in Q2, becoming another emerging growth driver of the economy,” the report said.
The recovery is expected to strengthen in the remaining quarters of the fiscal year, according to the report. In September, October, and November 2021, 19 of 22 high-frequency indicators (HFI) crossed pre-pandemic levels, compared to the same months in 2019.
The new coronavirus variant, however, “may pose a fresh risk to the ongoing global recovery,” according to the report. The variant is expected to be “less severe and more so with the increasing pace of vaccination in India,” according to the report.