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India may regain ‘fastest-growing economy’ tag in 2021; base effect, Modi govt policies to help

India may dramatically reverse the economic loss it suffered in 2020, and may regain the fastest growing economy tag in the next year. In the year 2021, India is projected to grow faster than most major economies, including European nations, developed markets, and emerging markets. While the low base effect is believed to be the biggest reason for the sharp economic recovery, Prime Minister Narendra Modi government’s measures are also among the significant reasons behind the expected rebound.

From a 23.9 per cent contraction in the fiscal’s first quarter, the Indian economy improved to a contraction of 7.5 per cent in Q2. This has also led to increased optimism for India’s growth in the subsequent quarters. In a series of forecast revisions, many credit rating agencies have raised India’s growth projections.

In the latest report, Fitch Ratings said that the outlook for India is brighter, owing to an expected rollout of various vaccines in 2021. India has pre-ordered 160 crore doses including 50 crore doses of the Oxford/AstraZeneca vaccine. It added that the distribution should allow a faster-than-expected easing of social-distancing restrictions and boost sentiment. Once the fastest-growing economy, India lost this tag to China amid the slowdown that hit India much before the coronavirus pandemic.

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