The Indian economy is showing signs of revival from the impact of the covid-19 second wave on the back of targeted fiscal relief, monetary policy measures, and a rapid vaccination drive, the finance ministry said on Friday.
“Maintaining a rapid pace on vaccination and bridging healthcare infrastructure gaps across both urban and rural areas would emerge as the most sustainable stimulus for durable recovery of the Indian economy,” the department of economic affairs said in its latest monthly economic report.
The cabinet on Thursday approved a ₹23,123 crore package to prevent a repeat of the disastrous events surrounding the second wave of the covid pandemic in case a third wave strikes. Patients struggled to find hospitals beds, oxygen and medicines during the deadly second wave. The ‘India Covid-19 Emergency Response and Health System Preparedness Package: Phase-II’ will be implemented by 31 March, with the share of the Centre and states at ₹15,000 crore and ₹8,123 crore, respectively.
The finance ministry said that as daily covid-19 cases and deaths have ebbed since the second half of May 2021, the recovery momentum in several high-frequency indicators has accelerated. “India is on the move again with the total volume of e-way bills rising 37.1% in June 2021 over May 2021 and 26% year-on-year. This augurs well for GST collections in subsequent months,” it said.
However, the finance ministry admitted that recovery remains uneven with indicators such as port traffic, air traffic, PMI manufacturing and services demonstrating lagged revival from the impact of second wave. “Resilient tax collections of the central government in the first two months of FY 2020- 21 and sustained momentum in capital expenditure, particularly in the road and rail sector, augurs well for pivoting targeted fiscal support for continued economic recovery,” it added.
The report said that the recently announced economic relief package is expected to further oil the wheels of the capex cycle via implementation of the PLI scheme and streamlining of processes for PPP projects and asset monetization. “Consumption sentiment is expected to pick up with further enhancement of employment support under Aatma Nirbhar Bharat Rozgar Yojana (ANBRY) and wider BharatNet digitization coverage. Free food-grain and enhanced fertilizer subsidies under the package along with continued MGNREGA implementation, on the other hand, would serve as a cushion for rural demand in the coming quarters,” it said.
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