Owing to tactical reforms, enhanced mobility and swift vaccination drive, the Indian Economy is well set on a path to rapid recovery, according to the Monthly Economic Report (MER) issued by the Finance Ministry for September 2021. The subsiding of the second wave of the COVID 19 pandemic has fuelled the momentum for an economic upswing in September alongside robust growth in agriculture, manufacturing, resuming of services activity, and booming revenues.
The report prepared by the Ministry’s Department of Economic Affairs highlighted that more than 75 percent of the Indian population has received at least one dose of the vaccine and the June MER target of 670 million vaccine doses has already been achieved.
Major Findings of the Report
The review pointed out that “India is well-placed on the path to swift recovery with growth impulses visibly transmitted to all sectors of the economy. Strategic reforms undertaken so far along with new milestones in vaccination drive have enabled the economy to navigate the ravaging waves of the COVID-19 pandemic.”
- India's merchandise exports crossed the USD 30-billion mark for the sixth consecutive month in the fiscal year 2021-22.
- The external debt-to-GDP ratio continues to remain agreeable, declining to 20.2 percent at the end of June 2021, from 21.1 percent at the end of March 2021.
- Consumption and investment demand is also picking up in addition to improvement in mobility which is currently around 90 percent of the pre-pandemic level.
In terms of COVID recovery, 930 million cumulative doses have been administered so far, which is the second-highest among all countries. The report added that India will be able to vaccinate the entire adult population by the end of 2021.
- The population is showing signs of attaining herd immunity and is rapidly gaining recovery momentum going by the current rate of inoculation.
- India’s average daily inoculation rate saw a 91 percent rise from 4.1 million in June to 7.9 million in September, the highest after China.
- The ministry mentioned that 10 states and union territories have achieved 100 percent coverage of their respective adult populations with the first dose. However, second dose coverage remains less than 40 percent in most states, but is expected to increase significantly in the coming months.
The Report noted that “sustained and robust growth in agriculture, a sharp rebound in manufacturing and industry, resumption of services activity and buoyant revenues suggest that the economy is progressing well.”
Rural demand remains strong due to an estimated increase of Kharif production, record-high procurement of wheat and paddy in Rabi marketing season, and ongoing Kharif marketing season, respectively. Moreover, a satisfactory monsoon may offer similar benefits in the future as well, the Ministry said.
- The overhauling of supply chains, improved mobility, and weakening food inflation has led to the consumer price index (CPI) based inflation falling back to 5.3 percent in August, the lowest in four months, which shows that inflationary tendencies were caused by the pandemic and are therefore temporary.
- However, concerns remain about unstable prices in the international crude oil markets and rising prices of edible oils and metals.
- The benchmark 10-year G-sec yields have been stable in September thanks to secure levels of systemic liquidity and moderate inflation levels, remaining at 6.2 percent.
- Foreign direct investment has also been at comfortable levels showing that India remains a valuable destination for global investors. The months from April to July in FY22 saw FDI inflows of $27.37 billion which is a 62 percent increase over the same period in FY21 ($16.92 billion).
- Keeping up with the growth impulses witnessed across the economy, the rate of growth of bank credit stood at 6.7 percent year on year in the fortnight ending September 10, 2021, compared to 5.3 percent in the corresponding period of the previous year.
Citing a boost in industrial output and softening of inflationary pressures, the report emphasized that “sectorally, credit offtake by agriculture and allied activities, and micro, small and medium industries continued to perform well in August. Growth uptick in personal loans augurs well for improved consumption spending in festive months.”
Ease in restrictions post the second deadly wave of COVID has heralded a robust recovery in the ailing Indian Economy. Economists have estimated that the Indian economy can be expected to grow close to double digits in the current fiscal year. What’s more, the Reserve Bank of India has retained its growth forecast of 9.5% for 2021-22
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