Projecting next year's growth to be a story of two halves, with the low base-effect lifting the growth engine in the first half and a broad-based recovery in the second, Credit rating agency Crisil in its latest report has said that higher infrastructure investments and the production-linked incentive (PLI) scheme will drive investments and thus Gross domestic product (GDP). Like others, it also expects growth to rebound to 11 percent in the financial year 2021-22, after an estimated 8 percent contraction this fiscal.
The agency sees four positive drivers converging next fiscal -- people learning to live with the new normal after the pandemic, flattening of the coronavirus infection curve, more vaccinations, and investment-focused government spending. But, it said the pace of growth will be different in the first and second halves as was in the outgoing year, with the first half benefitting optically from the low-base effect, second half seeing a more broad-based pick-up in economic activity, owing to rising commodity prices, large-scale vaccination and a likely stronger global growth,
The report was also quick to warn that recovery will not be easy, with small businesses and the urban poor still suffering from the impact of the pandemic, and urban markets and services still lagging manufacturing in recovery, even as the rural economy remains more resilient. Trade has also normalized faster than the rest of the economy with both exports and imports scaling back to pre-pandemic levels. While export recovery has been good for large industries and agriculture and allied sectors, it remains weak for gems and jewellery, garments, and leather products that are labour-intensive and small in scale.