The Reserve Bank of India has said in a report that the vaccine drive may help India regain a positive GDP growth in 2021. It observed that the growth will be a V-shaped recovery where the letter "V" stands for the vaccine.
The government launched the biggest vaccination drive in the world on January 16 to get rid of persistent COVID-19 vows which have been troubling the nation for almost a year now.
India’s vaccine drive was backed by a sophisticated system designed to be as efficient as possible. Furthermore, the comparative advantage of having the biggest vaccine production facility in the world and rich experience in mass vaccination operations against Polio and measles have surely favoured India in the fight against coronavirus.
"What will 2021 look like? The shape of the recovery will be V-shaped after all and the 'V' stands for the vaccine," said an article on the 'state of economy' in the RBI's January Bulletin.
The RBI, however, said the views expressed in this article are those of the authors and do not necessarily represent the views of the central bank.
"If successful, it will tilt the balance of risks upwards," said the authors who among others include RBI deputy governor Michael Debabrata Patra.
The article further said: "Recent shifts in the macroeconomic landscape have brightened the outlook, with GDP in striking distance of attaining positive territory and inflation easing closer to the target."
After the COVID-19 pandemic hit almost every key manufacturing and service segment of the economy, India’s GDP growth rate is expected to contract at a record 7.7 per cent during 2020-21, as per government projections released this month.
The article further said that in the first half of 2021-22, GDP growth will benefit from statistical support and is likely to be mostly consumption-driven.
"India being the global capital for vaccine manufacturing, pharmaceuticals exports are expected to receive a big impetus with the start of vaccination drives globally. Agricultural exports remain resilient and under the recent production linked (PLI) scheme, the food processing industry has been accorded priority," it said.
Finance minister Nirmala Sitharaman is scheduled to present the Union Budget in Lok Sabha on February 1.
