Omicron impact to be less severe on India’s economy, says report

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ByRajeev Jayaswal, Hindustan Times, New Delhi

The new Omicron variant of Covid-19 may pose “a fresh risk” to the ongoing global recovery, but its impact would be “less severe” for India due to the increasing pace of vaccination in the country, a finance ministry report said on Saturday, expressing confidence in robust recovery of the domestic economy in the third and the fourth quarters of the financial year that ends in March.

India’s economic recovery is expected to gain further strength in the remaining two quarters of the current financial year, as evident from 19 among 22 high frequency indicators (HFIs) in September, October and November crossing their pre-pandemic levels in the corresponding months of 2019, the ministry said in its monthly economic review for November.

“India’s economic recovery is expected to gain further strength in the remaining quarters of the financial year on the back of upbeat market sentiments, rapid vaccination coverage, strong external demand and continuous policy support by Government and RBI (Reserve Bank of India),” the report said. “However, the new Omicron variant of Covid-19 poses a challenge to the sustained recovery, and Covid-19 appropriate behaviour is warranted.”

“That said, the economy is better prepared to work with Covid, with rapidly growing vaccination coverage and lessons learnt from second wave in containing the contagion,” it added.

The government is cautious about the Omicron variant, but with rapid vaccination and strong Covid-19 protocols, it is confident about sustained growth momentum, finance minister Nirmala Sitharaman said last week at the Hindustan Times Leadership Summit.

“I’m still very hopeful that this year’s GDP (gross domestic product) numbers would be very encouraging, and we’d still be the fastest growing economy in the world,” Sitharaman said on November 4.

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