“The agglutination of supply disruptions, the health crisis, an unparalleled mass migration and a hostile global environment has caused considerable loss of output – over a tenth of annual GDP of a normal year,” said Patra at a conference on ‘Growth And Development in the BRICS Economies’ organised by the Delhi School of Economics and Indian Statistical Institute, Delhi.
India was one of the fragile five countries in 2013 as external sector viability deteriorated during the taper tantrum. But India is better positioned since then and currently its macroeconomic fundamentals have improved significantly and external sector indicators point to the availability of enough cushions to manage external shocks.
“I present this strength as a challenge because the international environment is turning hostile, with geopolitical tensions, the long-lasting scars of Covid and the inevitability of climate change.” Patra said.
“Countries all over the world are contemplating shifting their policy stances away from a pandemic mode to a more normal one. This will involve global spill-overs to which India cannot be immune. Hence, external sector viability is critical.”
India is currently one of the fastest-growing major economies in the world. In purchasing power parity (PPP) terms, India is the third largest economy in the world. Projections show that by 2040 India will be the second largest economy in the world. “This, in my view, is a challenge – preparing, with the BRICS, to be a global economic powerhouse,” Patra said.
Only 34% of units could function during March 25, 2020 to June 30, 2020, with the exception of the health and financial sectors. As regards wage loss, the impact on the organised sector was soft as 80.7% of employees received full wages and only 2.7 % went without wages. “Putting people back to work, reskilling them to respond to the changing environment and enhancing their productivity is the third challenge. Out of 132 countries, India is ranked at 100 in terms of labour productivity,” Patra said.
