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

India’s economic recovery is expected to gain further strength in the remaining two quarters of the current financial year, the finance ministry said in its monthly economic review for November.

 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.

A health worker taking a swab for RT-PCR test. (Rahul Raut/HT PHOTO)

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.

“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.