An Economic Rebound Can Help Government In Elections Next Year

A recent Credit Suisse study talked about how 100 unicorns - firms with more than $1 billion valuation - have sprung up in India in just a few years

At the beginning of 2021, when S&P Global Ratings forecast Indian gross domestic product growth at 11 per cent for the coming financial year, the number looked eminently achievable. Last month, the Goods and Services Tax - a good barometer of economy activity - hit Rs 1.41 trillion ($19.1 billion), its highest ever monthly collection. Indeed, it's been higher than the benchmark Rs 1 trillion for seven consecutive months and higher than the same month for the last year for eight consecutive months. India's international merchandise trade reached $34 billion in March, the highest ever, and stayed over $30 billion in April. Many short term economic indicators - auto sales, electricity consumption, highway toll collection - were also pointing to a strong recovery after a crushing 2020. But that's when the second wave of the pandemic hit with a vengeance. The daily case count went up from 81,000 on April 1 to more than 402,000 thousand on April 30. India's healthcare system came under severe stress the same month. As the outbreak grew worse, state governments applied restrictive lockdown measures that halted the nascent economic recovery in its tracks. According to the Centre for Monitoring Indian Economy - a think tank - the unemployment rate grew from 6 per cent in March to 8 per cent in April. Studies show that more than 200 million Indians are expected to fall into poverty as a result of shutdowns and healthcare costs. The S&P has now downgraded Indian GDP growth to 9.8 per cent.