In his excellent book 'Ride On' McCarthy explains many of his songs.
This was written after an illnes brought on by being 'run down' as in worn out rather than driven over. He was in hospital for a 'procedure' and discharged by taxi within hours. He was 'strung out' and had a disagreement with his father and left for Kenmare where on Good Friday he had a session with a healer. Over a few days this healing worked and with his friend Chris Meehan he sang a number of songs. On Easter Sunday he woke and wrote this song - the chorus came to him spontaniously. His verdict was "There is a God, thanks be to God". In essence the song appears to have arrived in his head fully formed on that Easter weekend when he recovered his health.