New Delhi: The Indian economy recovered strongly in the last few months despite facing three dangerous covid waves, the latest report prepared by the US Treasury said on Friday.
Treasury in its semi-annual report said that “India’s acute second wave weighed heavily on growth through the middle of 2021, delaying its economic recovery, However, economic activity rebounded strongly in the second half of the year as India’s vaccination rollout accelerated.”
After contracting seven percent in 2020, the output returned to pre-pandemic levels by the second quarter of 2021, with full-year 2021 growth of eight percent.
The Indian government continued to provide fiscal support to the economy against the backdrop of the pandemic in 2021.
According to the Treasury, the Reserve Bank of India kept its key policy rates unchanged at four percent since May 2020, but in January 2021 it began to gradually unwind the extraordinary liquidity measures designed to support growth during the early part of the coronavirus pandemic.
The return to a current account deficit was driven by a sharp deterioration in India’s trade deficit, which widened to USD 177 billion in 2021 from USD 95 billion the previous year, it said.
Treasury praised India’s vaccination efforts also as of the end of 2021, about 44 percent of India’s population was fully vaccinated. Since the beginning of 2022, India faced a third major outbreak driven by the Omicron variant, but the number of deaths and the broader economic fallout has been limited.
(Vinayak)