UNCTAD: Indian economy to expand by 7.2% in 2021

The United Nations Conference on Trade and Development (UNCTAD) has released its Trade and Development report on September 15, 2021.

Key findings of the report

  • According to the report, India’s economic growth rate will increased to a four-year high of 7.2 per cent in 2021 as compared to a contraction of 7 per cent in 2020.
  • With this growth rate, India will be the fastest growing economy after China.
  • China is projected to grow by 8.3 per cent.
  • These calculations were made on the basis of GDP at constant dollars in 2015.
  • UNCTAD has also projected that, India’s economy will outpace all other major economies in the year 2022 even though the growth would be slower, at 6.7 per cent.
  • According to the report, India’s economy that reduced by seven per cent in 2020, showed a strong growth of 1.9 per cent in first quarter of 2021, in the backdrop of the momentum of second half of 2020. It was also supported by government spending in goods and services.

Impact of Covid-19

According to UNCTAD, a severe and broadly unanticipated second wave of the covid-19 pandemic along with the bottlenecks in vaccine roll-out, hit India in the second quarter of 2021. Apart from that, rising food and general price inflation, widespread lockdowns and drastic consumption & investment adjustments also hit India.

Asian economies

As per report, other Asian economies have witnessed the largest portfolio outflows of all regions, throughout 2020 and 2021. Portfolios include substantive non-resident investor flight of the domestic sovereign bond markets, strong FDI etc.

Retail inflation in India

UNCTAD also raised the issue of high retail inflation in India. However, it does not take into account the easing of rate of price rise. According to UN body, consumer inflation was at six per cent before covid-19 pandemic. But pandemic caused a temporary drop in prices. However, as the economy recovered and food prices accelerated, India was back a 6% inflation rate in mid-2021.

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