The Covid-19 variant is disrupting businesses and social activity again. But economists are confident that India will trend close to the 8 percent growth path in FY23, aided by exports, government capex and private consumption
For the growth momentum to sustain in FY23, private consumption will be a critical factor. This will be driven by urban demand, in the form of more jobs, better wages and activity of contact-intensive services, including malls, restaurants, retail stores, movie halls and gyms
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The year just gone would seem dichotomous for most in India. For the professionals, it would have meant adjusting to a hybrid model of working remotely from homes during the scarring second pandemic wave and then back to office towards the end of the year. Jobs and salaries in the metros and large cities were secure and grew, if you were in the IT/ITES, pharmaceuticals, health care, financial services and chemicals space. But for the self-employed who ran small business it meant seeing their revenues dwindle.
By mid-2021—as vaccinations gathered pace and new Covid-19 cases slowed—business activity and sentiment improved. India’s GDP had soared by a robust 20.1 percent by June-end, simply due to a statistical low base of 2020. Investor sentiment boosted stock indices, rising 22 percent in 2021 and assisting corporates to raise fresh capital through record initial public offerings (IPO). But, by the end of the year, much of the euphoria turned into concern: The markets corrected over 10 percent from a Sensex peak of 62,254 points in October.
Foreign investors had intensified sales by then as global central banks announced plans to tighten liquidity and focus on battling inflation by raising interest rates. The Covid-19 virus was not done yet and the new variant B.1.1.529 (Omicron) spread across 125 countries from late November, hurting mobility and consumer sentiment.
The Centre for Monitoring Indian Economy (CMIE) recorded a fall in consumer sentiment in December 2021. The weekly index of consumer sentiments for the week ended December 26 was at 55.1, down from a year’s peak of 61.9 on November 21. “The fall in consumer sentiments in December after five months of an impressive rise raises some questions regarding the recovery of the economy,” says Mahesh Vyas, managing director and CEO of CMIE, in his website column.
(This story appears in the 28 January, 2022 issue of Forbes India. To visit our Archives, click here.)