The Indian economy is heading towards an uncertain but pivotal moment. It is coming off a historically poor run with the economy having shrunk by a post-Independence record 7.3 per cent in 2020-21. This contraction was also an order of magnitude greater than the 3.3 per cent contraction of the world economy in 2020. In other words, India did poorly with respect to both its own past and the rest of the world. The economy is now expected to return to its pre-pandemic level of GDP only in 2022. The pandemic will effectively have cost India two years of lost income growth.
This isn’t the only bad news. The Covid contraction was preceded by almost 13 quarters of continuous decline in real GDP growth. This backdrop of declining growth and the precipitous Covid contraction is likely going to reverse decades of progress in lifting Indians out of poverty.
A little background on poverty in India is useful here. The percentage of Indians…
