India will be among the large economies most severely hit by the Covid-19 pandemic and the lockdown restrictions to combat it, a new report by the Organisation for Economic Co-operation and Development predicts.
Data published as part of the OECD Economic Outlook, Interim Report March 2021 on Tuesday forecasts that the real GDP value of India’s economy for the fourth quarter of 2021 will be 7.8% lower than the organisation’s pre-pandemic prediction.
The percentage change for the European Union is -3.8, and for China -1.
Notably, the figure in the United States is expected to be 0.2% higher than originally estimated. “The significant fiscal stimulus in the United States, along with faster vaccination, could boost US GDP growth by over 3 percentage points this year, with welcome demand spillovers in key trading partners,” notes the report.
India’s sharp fall comes even though it is predicted to be the fastest growing economy in 2021, with a GDP rise of 12.6%, as per the OECD. However, this is undermined by the fact that India’s economic hit due to Covid-19 was also severe, with an expected GDP shrinkage of 7.4% in 2020. As a result, the potential shrinkage of India’s Q4 2021 GDP, when measured against the OECD’s predictions pre and post lockdown, is the largest.
While the Union government has highlighted India’s fast growth after the lockdown was lifted, calling it a “V-shaped recovery”, experts have warned that India could take a significant amount of time to get back to ts pre-Covid growth path and wipe out the economic damage caused by the lockdown.
Speaking to Scroll.in in November, Sabyasachi Kar, who holds the Reserve Bank of India Chair at the National Institute of Public Finance and Policy, had drawn up a model that showed that it will take upto 2033 for India to return to the pre-Covid growth path even assuming that India’s recovery is “V-shaped” and its GDP grows at a very high rate of 7% for the next 13 years.
However, the OECD report does note that India’s recovery has been significant: “The rebound has been relatively fast in several large emerging-market economies. Activity moved above pre-pandemic levels in China, India and Turkey, helped by strong fiscal and quasi-fiscal measures and a recovery in manufacturing and construction.”