The claim that there has been a record recovery may seem correct on paper. Comparing the figures for growth in quarter ending in June 2021 – 22 with June 2020-21 there is a 20.1% recovery rate, which is the highest growth in India, since the quarterly estimates were issued in 1996. But what is missing in this celebration is the crucial fact that growth in the quarter ending in June 20-21 compared with June 2019-20 saw a contraction of roughly 24.4%. The growth is not commensurate to overcome the contraction that took place.
It is normal for the economy to contract suddenly during an abnormal situation like a pandemic and lockdown etc. and recover once the economy goes back to normal with the businesses, manufacturing and other sectors starting to function normally. Hence the rebound is normal, but what we need to see is whether the growth has returned to pre-pandemic figures.
The government is claiming that there is V shaped recovery. But the economic survey suggests that if we have 10% growth rate in 2021 and 6 to 7% growth rate in 2021-22 and 2023-24 even then the GDP achieved by the end of 2023-24 will be 90% short of what we could have achieved if the trend of growth rate did not fall.
Now, if we compare the growth in the quarter of June 2021-22 with the quarter ending in June 2019-20 (pre-pandemic) what do we get? We see that the private final consumption level is 11.9% lower; the Gross fix capital formation is 17.1% lower; Manufacturing the gross value added is 4.2% lower. Only positive as compared to pre-pandemic level is in exports, i.e. 8.7%. And only positive recovery than pre-pandemic figures is in utilities, i.e. in electricity, gas, water.
Let’s look at agriculture. According to PLFS data, there is a reversal of employment from non agriculture to agriculture. Employment in agriculture has increased. This increase is due to the increase of farm labourers and not the farmers. People who were earlier working in construction and other non farm based work have gone back to the village to take up farmed based work.
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