Indian economy recovered strongly despite 3 Covid-19 waves: US Treasury report
The Indian government continued to provide assistance to the economy, the report says
Despite three significant outbreaks of Covid-19, the Indian economy has recovered strongly, according to a report to the Congress from the US Treasury.
The Treasury, in its semi-annual report for June 2022, said that India's acute second wave weighed heavily on growth through the middle of 2021, delaying its economic recovery. The report, however, went on to praise India’s vaccination efforts, saying, "economic activity rebounded strongly in the second half of the year as India's vaccination rollout accelerated."
According to the report, around 44% of India's population had been completely vaccinated by the end of 2021. It also said that after contracting 7% in 2020, output returned to pre-pandemic levels by the second quarter of 2021, with full-year 2021 growth of 8%.
According to the report, India has been dealing with a third significant outbreak caused by the Omicron variant since the beginning of 2022, but the number of deaths and larger economic fallout has been limited.
The report also highlighted that the Indian government continued to provide economic assistance to the economy, adding that the authorities expect that the overall budget deficit for the fiscal year 2022 would be 6.9% of GDP, which is higher than deficits prior to the pandemic.
According to the US Treasury, remittances grew around 5% in 2021, reaching USD 87 billion, or 2.8% of GDP. Treasury assesses that India's external situation was broadly in accordance with economic fundamentals and acceptable policies in 2021, with a current account shortfall of 0.3% of GDP, the report noted.