Will the New Year 2021 bring in better economic prospects?

Finally, the year 2021 has arrived. People around the world invariably step into every New Year with new hopes, new aspirations, new goals and what not. This time, it is starkly different though. Many people stepped into the New Year 2021 with fear and a lot of anxiety. There is a valid reason for such despondent feelings. The year that has gone by reminded us of how vulnerable humanity is despite humongous advancements in science and technology. The coronavirus disease 2019, familiar for many as Covid-19, which originated in China towards the end of 2019, pushed the world into an unprecedented health and economic crisis during the course of 2020. The numbers tell the tragic story. As per the latest count, nearly 84 million people got infected with the deadly virus around the world. Of them, more than 1.8 million died.

It's too early to estimate the economic destruction the pandemic has caused as Covid has not yet been controlled or contained. But as per the estimates of the International Monetary Fund (IMF), global GDP would have contracted by 4.4 per cent last year. That's huge. In 2009 when the world went through the pain of the global financial crisis, the world GDP shrank by just 0.1 per cent. Now, we can imagine what the current Covid crisis has been doing to the world's economy.

And, no country is spared. While the US tops the country-wise list of Covid cases with over 20.44 million infections, a fourth of world's case load, India is at second place with 10.29 million cases. But the Covid's impact on the Indian economy is far higher compared to the US as the country's GDP contracted by a whopping 23.9 per cent in the first quarter (April-June 2020) and shrank by 7.5 per cent in the second quarter (July-September). It is widely expected that GDP will be back in the green in the third quarter (October-December) before taking off for a higher growth trajectory.

But the moot question is whether India's economy will bounce back with a bang in the New Year 2021. Going by the indications from the ground, it is very unlikely that the economy will register a rapid recovery. Furthermore, Covid danger still lurks. Recently, the UK discovered a new strain of the novel coronavirus that could spread 70 per cent faster than its earlier avatars. This has rattled the world once again. But on the brighter side, vaccine drives have begun in many countries and India may also start soon. Moreover, over 90 per cent of infected people are recovering. In this backdrop, India may see better economic prospects in 2021. Goodbye to a nightmarish 2020. Welcome to 2021, the New Year of Hope.