An easing of restrictions towards the end of 2020 helped propel a tentative recovery in activity, but this may prove short-lived following an explosion in Covid-19 cases in April and May.
India's vicious second wave, which has killed 160,000 people in eight weeks, prompted further lockdowns and saw 7.3 million people lose their jobs in April alone, according to the Centre for Monitoring the Indian Economy.
That means more pain in a country where 90 per cent of the workforce is in the informal sector with no social safety net, and where millions do not qualify for emergency government rations.
Prime minister Narendra Modi's government has so far refrained from announcing any fresh major stimulus measures in response.
The government has faced growing criticism -- including from Nobel prize-winning economists Esther Duflo and Abhijit Banerjee -- for focusing on loans to hard-hit businesses rather than direct cash handouts to vulnerable households.
In a recent report, British financial services firm Barclays pegged the economic cost of India's second wave at $74 billion, or 2.4 per cent of GDP.
But helped by output having slumped so much last year, the headline figures for the current fiscal year will still appear strong.
India's central bank is projecting annual growth of 10.5 per cent and the International Monetary Fund 12.5 per cent, the fastest among major economies.
"We expect 10 percent GDP growth in FY22, with a slight downside bias," Upasna Bhardwaj, senior economist at Kotak Mahindra Bank, told AFP.
But she warned that analysts would "have to revisit this expectation much more often, given it depends on the pace of vaccinations and the pace of restrictions".
"While the situation this year is not as bad as the national lockdown last year, the economy is coming under a lot of stress due to localised restrictions, which we expect to continue into the rest of the year."
India's economy was in the throes of a prolonged slowdown even before Covid-19 struck, but the pandemic untraveled years of gains.
An estimated 50 million Indians were expected to climb out of poverty last year.
But instead the poorest 20 per cent of households lost their entire income in April and May as business ground to a halt.
The stringent months-long nationwide lockdown put around 100 million people out of work, according to a report by Azim Premji University, with around 15 per cent unable to find jobs even by the end of the year.
Namdev Sakpal, 43, lost his job at tour operator Thomas Cook last year and has spent months trying to find work.
"With the local trains not functioning I can't even go looking for jobs. Everything is closed," the father-of-three told AFP.
A former sous-chef at a top Mumbai hotel said he was put on unpaid leave last June and has yet to resume work.
"The lockdowns are causing continuous uncertainty for all our jobs," Prateek, who declined to give his full name, told AFP.
"We were told that we will get called back to work soon, but the lockdowns keep getting extended."
Experts say the second wave, which has burrowed into India's ill-equipped villages, could spark a fresh crisis among an impoverished population already reeling from last year's shutdown.
"This time, unlike the last time, income destruction has been universal -- both rural and urban India has been affected," Arvind Singhal, Chairman of Technopak Advisors, told AFP.
"The 200 million poorest families should be given cash directly. And that needs to be given right now, not later."
India has recorded 28 million coronavirus cases so far and distributed 213 million doses of the Covid-19 jab, with its massive vaccination programme facing delays and shortages.