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The US is stunned at India’s phenomenal growth and it shows

Rahul Gupta by Rahul Gupta
12 June 2022
in Analysis
The US is stunned at India’s phenomenal growth and it shows
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India’s economic management success in handling the three successive waves of covid will prove to be the key case study of resource management. With limited resources, complete lockdown, and about 130 crore population, the government of India had not only to fight with the invisible enemy but also feed its poor population effectively. In managing the situation, the government not only provided infrastructure and budget support to create the vaccine but also managed to bring the GDP growth rate on track. Reforms in policies & investment, a large consumption market, and a huge base of skilled or unskilled labor force provided the path to recovery of the economy. And, the world has started to recognize this very fact.

Effectively fighting the three waves of the Chinese Virus

The US Department of the treasury in its report titled Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States has lauded the economic recovery and its resource management during the covid pandemic.

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The report states that “since the onset of the global pandemic, India has faced three significant outbreaks of COVID-19. India’s acute second wave weighed heavily on growth through the middle of 2021, delaying its economic recovery. However, economic activity rebounded strongly in the second half of the year as India’s vaccination rollout accelerated”.

As of the end of 2021, about 44% of India’s population was fully vaccinated. After contracting 7% in 2020, the output returned to pre-pandemic levels by the second quarter of 2021, with full-year 2021 growth of 8%. Since the beginning of 2022, India has contended with a third major outbreak driven by the Omicron variant, but the number of deaths and broader economic fallout has been limited, the report added.

Read More: World Bank in awe of India’s PLI scheme as the nation looks all set to become the world’s fastest-growing economy

Increased export to the US helped to maintain the trade balance

India’s bilateral trade surplus with the United States has expanded significantly in the past year. Between 2013 and 2020, India ran bilateral goods and services trade surpluses of about $30 billion with the United States. In 2021, the goods and services trade surplus reached $45 billion, a material increase from $34 billion in the four quarters through December 2020. India’s bilateral goods trade surplus reached $33 billion (up 37%), while the bilateral services surplus grew to $12 billion (up 29%) in 2021. The expansion has been driven primarily by elevated U.S. demand, particularly for goods, as the U.S. economy recovered strongly in 2021.

Read More: IMF has predicted a continuous upward trajectory for the Indian economy

Increased export to the US has helped India to maintain its international balance of trade. And recently, the US has also replaced China as the largest trading partner of India in 2021-22 as the bilateral trade between the US and India stood at $119.42 billion in 2021-22 against $80.51 billion in 2020-21.

The government’s continued push for structural reforms, capital investment, and targeted delivery of essential services has helped to bring the economy on track and the US’s report is the testimony to this fact.

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