The first wave of Covid 19 was not much harsh on India, even if it was very much harsh on many other countries. There were continuous lockdowns and lost lot of working hours and energy which other way might have boosted the economy to grow. India could smartly handle the first wave and was on the way of bouncing back with lot more power, then the second wave started.
Late February entry of Covid 19 Version.2 was disastrous and made the country to a standstill. Investors across the globe was discussing about enviable GDP numbers, but the unwelcome guest put every thing to disarray.
The rampage was/is slow and steady but by March end the picture started changing and then April was disastrous. A mutant version of the virus attacked the country and ravaged/ing. The healthcare infrastructure was taken for a toll and stretched like never before. The speed was much more than expected by anyone, within weeks the numbers swelled in lakhs. The picture was of entire India and some states who were congratulated by many in the first wave have been devastated.
Unlike first wave, when urban India was attacked, this time, rural India took the pain. The impact was really painful at micro level, but a come back by the world’s largest democracy is much needed.
The first silverlight came in April 2021, as the export has crossed 30 billion US dollars, which was an oasis for the country for such a long time. In March the numbers were $34 billion and in April it was $30 million. It is very significant as we could not score this level in good times, it came in the worst time. Indian exports usually were supported by sectors like textiles, handicrafts , leather, chemicals etc but the volumes from sectors like Pharma, electric equipment, engineering also got considerable volume. Big targets like $350 billion or $400 billion annually may looks tough but not impossible.
India also could attract smart numbers in foreign direct investment in financial year 2020-21. The inflow to equity was around $59 million in 2020-21 when comparing to the figure of $49 million in last year.
Total FDI, inclusive of reinvested earnings and other capital, grew 10% to $81 billion from $74 billion in 2019-20. These FDI inflows also signify investor confidence in the Indian economy for the long term.
In the global remittance front also India performed well while comparing to projection made by many international organisations including World Bank. India received $83 billion as remittances in 2020 while world bank predicted a sharp drop. India remained as one of the top most investment destination.
More than 12000 companies were registered in India in April 2020 which also is a sign that, the investment plans are not curtailed by Indian’s due to Covid.
When we look on to the FDI numbers, we can find that most of the investment came to sectors like computer hardware and software, infrastructure, Pharma and services. The target was not tradition areas but on emerging sectors.
With India aiming to attract new manufacturers in a host of sectors through production linked incentives (PLI), the trifecta of local market attractiveness, near-term investment boosting measures and the need to look beyond China for exports may finally be taking shape.
A strong economic revival is much needed for the Indian government to emerge stronger out of the pandemic.
Expanding vaccination coverage may significantly slow down the pandemic but it will take another a year minimum to complete. Meanwhile, the country has to co-exist with the virus and a critical ingredient of success will be return to economic normalcy.
The new financial year seems to have started on the right note. Fiscal policy interventions, new trade pacts and a rapid deployment of the planned PLI program will remain key to success.