The global economic landscape has turned more favourable in 2021, aided by additional policy stimulus amidst the ongoing vaccination drive. India’s vaccination drive is progressing steadily though needs to be ramped up. Meanwhile, a controlled COVID situation is aiding traction in economic activity, with further signs of broadening recovery. Policy backdrop has also become more supportive with stepped-up government spending as announced in the Budget, while monetary policy remains accommodative. Considering these factors, we revise real GDP projection for FY21 to -6.7% YoY from -7.8% YoY previously and for FY22 to +12.4% YoY, up from an earlier forecast of +9.9% YoY. While the broader economy is on a V-shaped recovery path, a K-shaped recovery is evident among companies (by size) and households which would require policy measures to mitigate the rise in inequality.
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