India’s economy emerges from the pandemic

Abstract

Based on the first advance estimates for the fiscal year 2021–22, economic activity in India has returned to pre-pandemic levels. Like many other countries, the Asian economic giant has been hit hard by the COVID-19 pandemic. The first wave of the virus in early 2020 was accompanied by a tight lockdown, during which economic activity contracted sharply by about a quarter. With growing levels of immunity and greater experience about how to live with the virus, the subsequent viral flares have been much less dramatic from a macroeconomic perspective. Based on the IHS Markit PMI Index, February is set to be India’s seventh consecutive month of solid economic growth (Chart 1). The positive developments have given rise to optimism that the pandemic’s grip on the Indian economy is finally waning.