Economy Of India: Growth And Development

Despite the huge fall in GDP in 2020, experts expect economic growth to pick up in 2021, driven by pent-up demand for consumer and investment goods. Returning to decline in 2022 is also anticipated.

During the past month, the number of infections has soared dramatically. This has affected the nascent economic recovery and may cause even greater financial hardship for corporations and banks. High-frequency indicators suggest that despite the widespread anxiety and lockdowns, the overall impact of the outbreak may have slowed in the April-June quarter.

Indian Economy & COVID-19

As a result of the deadly COVID-19 second wave, India’s recovery is holding up, but what’s more concerning is the slow consumer spending caused by pandemic concerns. By addressing risks that impede consumer confidence, the country will boost spending. India began to see a recovery in its economy early this year until the much more severe second COVID-19 wave hit the country in April.

Humans and the country’s economy continue to bear the burden of the COVID-19 pandemic and food price inflation. In the first quarter of FY2020-21, the economy grew 3.1 percent after improving business sentiment and a strong recovery among industrial nations. Private investment and goods exports in segments like engineering goods, chemical products, and pharmaceuticals made remarkably good progress in the final quarter of this fiscal year despite heavy government spending.

An unexpected trend (from the GDP numbers) was that consumer spending remained restrained, a sign of financial and health anxieties. Several mutations suggest COVID-19 variants of concern, which could continue the spread of the pandemic. With the second wave over, the economy has a better chance of recovering. A greater percentage of the population will be vaccinated in successive waves, which will have diminishing economic effects.

In any case, the recovery will likely be delayed into the next fiscal year. We can conclude that consumers have yet to recover from their financial and emotional scars using high-frequency data. While the upper-middle and higher-income classes with more savings are eager to spend, the weakening labor market, rising inflation, and weakened household debt can threaten consumers’ resilience.

Vaccinating India’s population rapidly is the key to recovering consumer confidence. In parallel, policymakers should be aware of the above risks looming over the pent-up demand on which our recovery depends so much. Taking quick measures will help them prevent these factors from spiraling out of control.

Indian Economy Sectors

Several studies suggest that by 2050, India will have the second-largest economy in the world. India’s economy is composed of many components. An Indian economy consists of three major sectors: Primary, Secondary, and Tertiary. 

• Primary Sector: Natural resources play a major role in the development of these sectors. The products in this sector are also heavily reliant on natural resources. In this sector, certain processes require the use of natural resources as well. This sector’s entire operations depend on the presence of adequate natural resources just to keep up with the required operational requirements daily.
• Secondary Sector: This sector is similar to the secondary sector in its capacity to add value to products. After the expiration date, these products will no longer be consumed. There is a great deal of value-added to the products and services provided by this sector. 
• Tertiary Sector: In its capacity to add value to products, this sector is similar to the secondary sector. Transportation and manufacturing are the two most prominent examples. Downstream processing is associated with this sector. The industry in India contributes the greatest amount of GDP to the nation. 59% of GDP is generated by this sector. Tertiary sectors are vital for the development of primary and secondary sectors. It employs as many as 23 percent of the total working citizens in the country.

Post Pandemic Growth

Despite the constraints, this year’s business activity is improving. The current second wave will only cause a short-term setback, and medium-term growth is still predicted for the remainder of 2021. Indian economic activity is expected to slow to a degree as localized lockdowns during the second Covid-19 wave affect India’s recovery in April 2021, but not as severely as it did in 2020. 

The following employment fields are expected to grow faster than others in India:

• IT: It is estimated that the average wage increase for this sector will be 7.3% in 2021. The average raise for professionals changing their careers might be between 15 and 25% more than their previous income. An increase in hiring has been noticed in the SaaS, health-tech, and Ed-tech industries. Also, startups offer the option for the right staff to work from home or in a hybrid model. A variety of tracks in Artificial Intelligence (AI) and Machine Learning (ML) are highly sought after. There is also a considerable amount of use and migration of public, private, and hybrid clouds.
• Healthcare: COVID-19 outbreak resulted in a record number of vaccine firms hiring. However, India’s limited skilled pool has made this challenging. We anticipate significant recruitment in this field, along with fostering talent so that top talent can remain. According to forecasts, this sector will see an 8% annual pay raise in 2021. It is normal for new hires in this area who change jobs to receive a raise of 15-20%. 

A greater focus will be placed on talent development in existing settings, as well as increased funding for research and development. As the “Self-Reliant India Mission” and “Aatmanirbhar Bharat” are rolled out, as well as the government’s goal of implementing more preferential criteria for API manufacturers, those initiatives will help the industry grow in 2021 and beyond. Manufacturers and marketing talent, both domestic and international, will be in demand as a result.

• E-Commerce: E-commerce has seen the rise of warehousing and logistics platforms that are increasingly tech-enabled. This sector is expected to experience an average annual wage increase of 7.5% in 2021. Those who change jobs in this area can expect to see their income rise 16 percent over their previous position. As a result of community demand, essential delivery start-ups and hyperlocal start-ups have emerged, increasing in demand for product management experts.