The rate of false optimism.

"Nomura, which has built a business resumption index to gauge the recovery after the pandemic, said the index moved up by a notch for the week ended November 22 but continues to be below pre-pandemic levels." It has moved to 87.1, but in the previous week, the index "declined marginally to 85.3 for the week ended November 15 from a post-lockdown high of 85.8 a week earlier". "There is an expectation that even if the Indian economy contracts in the current financial year -- by, say, 10 percent -- it will perhaps grow by roughly the same percentage in the next financial year -- 2021-22," wrote Udit Misra. But, absolute level of GDP will be different even if the growth rate remains the same. "For instance, if an economy's GDP were to contract by 10 percent -- from 100 to 90 units -- in Year 1 and then grow by 10 percent in year 2 -- from 90 to 99, then at the end of the second year, the absolute level of GDP will still be lower than what it was two years ago. Had the initial contraction not happened, this economy's GDP would have been 116.6 units -- assuming an 8 percent average annual growth -- at the end of year 2." With 8% growth rate it will take 3 years to reach 116.6 level, after contraction. "Oxford Economics has forecast that India's potential growth is likely to average just 4.5 percent between 2020-2025, as opposed to its pre-virus forecast of 6.5 percent," which was lower than 6.8% average annual growth since economic liberalisation in 1992. "Atmanirbhar Bharat provides a vision of India's plans to become a USD 5 trillion economy by promoting 'Make in India - Make for World' and this will happen through an integration with the global economy, a senior official of the Ministry of External Affairs said." "It is tempting to believe India's size provides fertile ground for import substitution," wrote Sajjid Z Chinoy. But, " no emerging market has been able to sustain 7-8 percent growth for any length of time without relying on the Siamese twins of exports and investment." Global merchandise exports were more than 6 times India's GDP at $18 trillion in 2017, with India's share at 1.7% compared to China's share at 12.8%. Comparing India's and Pakistan's GDP growth per capita since 1950, Prof Amartya Lahiri wrote that "openness to trade and private enterprise usually has positive effects on growth". "Rapacious and exploitative democratic systems", religious fundamentalism, and "degradation of institutions that regulate, arbitrate and enforce laws can be costly". "Among the indicators, perhaps the most significant is the decline in number of establishments registered with the Employees' Provident Fund Organisation by 30,800 in October, compared to September," wrote Prof Himanshu, and the number of enrolled workers fell by 1.8 million. This reflects on the performance of micro, small and medium enterprises (MSME) sector which employs 111 million workers. Growth will come from people and not from hype. But they try.