India has posted the fastest pace of growth among major economies, raising hopes of a revival in its pandemic-hit economy. But fears of the omicron variant have triggered concerns of whether the pace can be sustained even as economists warn that unemployment levels are still high in a country where millions lost jobs during the pandemic.
India’s gross domestic product grew 8.4% from July to September this year compared to the same period last year, according to a government report.
While economies worldwide were hit hard due to the pandemic, India slipped into its worst recession in four decades last year with its economy shrinking by 7.3% after the Indian government imposed one of the toughest lockdowns in the world.
But there has been a significant turnaround in recent months with growth returning to levels before the pandemic, according to officials. “Data clearly shows that corporate income and profit are above the pre-pandemic level,” K.V. Subramanian, chief economist at the Finance Ministry said as he released the latest economic data.
The International Monetary Fund, IMF, has forecast growth of 9.5% for India in 2021 — if the growth stays on track, it would be fastest among major economies in the world, surpassing its projections of about 8% for China.
“What happens in India has a big impact, both in the region and in the world,” Luis Breuer, the IMF’s senior resident representative to India, said last month. “You’re talking about a large slice of humanity and the global economy.”
Experts say the opening of the economy as the pandemic waned after a deadly second wave in April and May and significant progress in the country’s vaccination program have helped the revival.
India has lifted all restrictions in recent months as cases decline to their lowest in a year and a half — the country has been reporting less than 10,000 new infections a day in recent weeks.
After spending a year indoors, people keen to get a sense of normalcy have crowded markets, hotels are booked as vacationers head out for holidays and streets in mega cities like Delhi and Mumbai are choked with traffic. That is helping a country whose economy is driven largely by millions of middle-class consumers.
India’s recent festive season saw shops and malls do brisk business. “We did no business at all for nearly a year, but customers have started ordering clothes from us since August this year,” Geeta Mehra, a boutique clothes retailer, told VOA. “Weddings that had been on hold for the last year and a half are now taking place which has resulted in good sales for us.”
However, she is cautious about increasing stocks and employing more people as fears of the new Omicron variant raise fresh concerns about the pandemic. India is now among nearly 30 countries where it has been found. Health authorities had reported 23 cases by Tuesday.
Some businesses, however, have still to recover. “Our business is only 20% of the pre-pandemic levels,” said Sanjay Kapur, a stationery retailer since the last 22 years. “Stationery requirement has become minimal as offices and schools are still closed and most work is done online. We can only wait and watch.
The threat of the Omicron variant looms large over people like Kapur — they worry it may keep offices and schools shut for longer than expected. And although the government has said it is not imposing any additional restrictions, curbs on international travel have been imposed.
Experts have described the recovery as uneven and fractured.
“The organized sector is looking up whereas the unorganized sector is not doing so well. Even within the organized sector some economic activities are performing better than others,” said Santosh Mehrotra, professor and chairperson of the Centre for Informal Sector and Labor Studies at Jawaharlal Nehru University. He points out that while sectors like manufacturing and technology have recovered, hospitality and retail that are among the biggest job creators, are still struggling.
Chavi Kasaudhan got a job at a retail store at Delhi airport recently. “I was lucky to get a break but many of those who did a six-month course in hospitality and retail with me are still waiting,” the 20-year-old said.
While jobs have been returning, millions are still struggling to find work, especially in the country’s vast informal sector that includes farm workers, street vendors, laborers, and rickshaw pullers.
Economists say official numbers do not reflect how this sector, where an estimated 90% of people work, is faring.
“What is not being captured by data is the fact that unemployment levels are very high,” Jawaharlal Nehru University’s Mehrotra said. Mehrotra estimates that the pandemic has added an additional 15 million to the number of poor people in the country, which represents a reversal of gains made in recent decades in alleviating poverty.
Still, there is optimism that Asia’s third largest economy is turning a corner, and the stress of the pandemic could be subsiding.
Suhasini Sood contributed to this story.