India’s 2021 economic output-below 2019 level: UN report

India’s 2021 economic output below 2019 level: UN report

GS-Paper-3: Economic issue and Economics Optional – UPSC PRELIMS – Mains Application

Context: India, according to the 'Economic and Social Survey of Asia and the Pacific 2021: Towards post-COVID-19 resilient economies', is estimated to record economic growth of 7 per cent in 2021-22, over a contraction of 7.7 per cent witnessed in the previous fiscal on account of the pandemic's impact on normal business activity.

News: India’s 2021 economic output, however, is expected to remain below the 2019 level despite a robust reduction in new Covid-19 cases and the start of vaccine roll-out. India entered the pandemic with already subdued GDP growth and investment. Moreover, one of the most stringent lockdowns in the world caused the severe economic disruptions that the country experienced in the year 2020.

A subsequent change in lockdown policies and success in reducing infection rates supported an impressive economic turnaround in the later months of 2020.

Challenges: The report mentions two major challenges for India on its path to faster recovery

Maintaining low borrowing costs, and
Keeping non-performing loans in check.

Observation Regarding Asia Pacific Countries:

The socio-economic impact of the Covid-19 pandemic was amplified due to a lack of resilience and investments in people and the planet.
China’s swift and effective response to Covid-19 enabled it to become the only major economy worldwide to achieve a positive annual economic growth rate in 2020.
On average, developing Asia-Pacific economies are expected to grow 5.9% in 2021 and 5% in 2022.
The prospect of a K-shaped recovery, characterized by uneven post-pandemic recovery across countries and widened inequality gaps within countries, is highlighted as a primary policy challenge.

K-Shaped Recovery

A K-shaped recovery occurs when, following a recession, different parts of the economy recover at different rates, times, or magnitudes. This is in contrast to an even, uniform recovery across sectors, industries, or groups of people.
A K-shaped recovery leads to changes in the structure of the economy or the broader society as economic outcomes and relations are fundamentally changed before and after the recession.
This type of recovery is called K-shaped because the path of different parts of the economy when charted together may diverge, resembling the two arms of the Roman letter "K."

Suggestions:

For a more robust and inclusive recovery, the report calls for a more synchronised Covid-19 vaccination programme across countries. There is a need to leverage regional cooperation.
It recommends that fiscal and monetary support should be sustained, as premature tightening could increase long-term scars.
Continuity in policy support is a must and recovery policy packages should focus on building resilience and investing in the 2030 Agenda for Sustainable Development.
To deal with various economic and non-economic shocks, a more integrated risk management approach to planning and policymaking is needed.

Economic and Social Survey of Asia and the Pacific

Produced annually since 1947, the Economic and Social Survey of Asia and the Pacific is the oldest United Nations report on the region’s progress.

The Survey monitors regional progress, provides cutting-edge analyses and guides policy discussion on the current and emerging socio-economic issues and policy challenges to support inclusive and sustainable development in the region.
Since 1957, the Survey has also contained a study or studies focusing on a significant aspect or challenge relevant to the economies of the Asia-Pacific region.
The Survey of 2021 studies the impact of Covid-19 pandemic and provides insights for post-Covid-19 resilient economies.

United Nations Economic and Social Commission for Asia and the Pacific

The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) is the regional development arm of the United Nations for the Asia-Pacific region.
It has 53 Member States and 9 Associate Members from Asia-Pacific Region including India.
Established: 1947
Headquarters: Bangkok, Thailand
Objective: To overcome some of the region’s greatest challenges by providing results-oriented projects, technical assistance and capacity building to member States.

Source: UNESCAP

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