UN Estimates Indian Economy Will Grow At 7.2% In 2021, Fall Next Year

The United Nations (UN) has published a report titled 'UNCTAD Trade and Development Report 2021', stating the Indian economy can grow at a 7.2%, but the growth rate might decelerate in the next year. The report said, "The recovery in the country is constrained by the ongoing human and economic cost of the Covid-19 pandemic and the negative impact of food price inflation on private consumption." The UN has also mentioned the wealth inequalities in India coupled with the increase in 'social unrest'.

However, in the upcoming year, according to the UN, the Indian economy can witness an economic growth of 6.7%, which will be a fall from this year's recovery pathway. The resurgence of the Covid pandemic, adverse policy environment especially on the fiscal front, along with continuing pressures on the trade balance - will be the major reasons behind this slowdown.

The report stated, "India, which experienced a contraction of 7.0% in 2020, showed strong quarterly growth of 1.9% growth in the first quarter 2021, on the back of the momentum of the second half of 2020, and supported by government spending in goods and services. Meanwhile, a severe and broadly unanticipated second wave of the pandemic, compounded by bottlenecks in the vaccine roll-out, hit the country in the second quarter, on top of rising food and general price inflation, forcing widespread lockdowns and drastic consumption and investment adjustments."

Commenting on the global scenario, the UN stated, "The global picture beyond 2021, however, remains shrouded in uncertainty." Global output fell by 3.5% in 2020; now according to the UN, this can grow by 5.3% in 2021. the report says that South Asia has suffered a sharp contraction of 5.6% in the last year, with the region's economic activity brought to a halt due to widespread restrictions.