The year had ended with an overall 15 percent gain on baseline numbers, driven by high liquidity, thanks to various measures initiated by the government to help lift the economy from the deep rut that the misadventure of demonetisation and the adverse effects of a poorly planned and implemented GST regime.

But what unveiled itself as the year got into serious business after the festivities of the new year was something that nobody had envisaged even in their most dreadful dreams. The outbreak of new coronavirus, later on named as Covid-19, the epicentre of which was China in the beginning, but shifted to the rest of Asia, including India, Europe and the US, changed life beyond recognition for nations, peoples, families and individuals, not to speak of businesses, markets and economies.

The pandemic has turned the world upside down and there is hardly an area that has not been affected by its impact. The pandemic is expected to lead to the worst recession since the Great Depression of the 1920s. It is estimated that the pandemic-induced lockdown would result in a cumulative output loss of $12 trillion to the global economy this year and the next. Millions of workers have lost their means of livelihood, with the crisis not sparing even the giants. The virus has necessitated sacrifices by not only economies, but political order, value systems and even finer spheres like human rights and democracy.

There is a new normal in every aspect of life, the way people interact, work, earn their livelihood and how governments deal with their problems. The pandemic has changed etiquettes, office routines, cultural practices and even the way religions are practiced, with Covid protocol taking precedence over everything else.

It has shocked both economic and national security concerns about supply-chain vulnerabilities and economic dependencies. Covid also prompted nations to look at ways to reduce their co-dependence on the global economy and shore up domestic productive capabilities. India, for instance, built up capacities to produce masks and PEP kits not only to meet domestic requirements, but to export to the world, all that within months of the pandemic taking hold.

There has been some improvement in India’s economic outlook as the Covid caseload flattened and got reversed, although the chances of a second wave of infection cannot be discounted, with UK and other countries reporting a more virulent strain of the virus, which has possibly been carried to India by passengers coming from these countries.

India, like all other major economies, has reported a recovery, although at times it has appeared patchy. Moody’s Investors Service, for instance, has revised its projected contraction in GDP in 2020-21 downwards from 11.5 per cent projected earlier to a 10.6 per cent. It has also marginally raised its forecast for 2021-22 GDP growth from 10.6 percent to 10.8 per cent.

The agency has also viewed the impact of stimulus packages and various RBI initiatives to improve liquidity as positive as it believes that stronger nominal GDP growth over the medium term would make it easier for the government to address its weak fiscal position, which the pandemic had exacerbated. Moody’s forecasts government debt to increase to 89.3 per cent of GDP in fiscal 2020, and then declining to 87.5 per cent in fiscal 2021, compared to 72.2 per cent in fiscal 2019.

But all this has not helped improve consumer confidence, which is vital for increasing demand in the economy. Consumer confidence continues to remain low while unemployment stays high, although both urban and rural unemployment rates have recovered from peaks in April and May during the nationwide lockdown.

There is need to simultaneously put focus on sustainability, bringing environmental and social issues to top of the agenda to achieve sustainable progress and prosperity for the people. (IPA Service)