- Tuesday, April 23, 2024
By: Shubham Ghosh
THE Indian finance ministry on Friday (9) said the country’s economy has started showing signs of recovery from the impact of the second wave of the Covid-19 pandemic, thanks to targeted fiscal relief, monetary policy and a rapid vaccination drive.
“The broad-based economic relief package, extended to mitigate the second wave, amounted to Rs 6.29 lakh crore ($85 billion). RBI continues with its efforts to calm the nerves of the market and revive sectors with both backward and forward linkages and multiplier effects on growth,” the ministry said in its monthly economic review for June.
In June, Union finance minister Nirmala Sitharaman announced eight economic measures amounting to Rs 6.29 lakh crore ($85 billion) to give stimulus to the economy and ease the financial impact of the pandemic and lockdown. Besides a stimulus package for health and other sectors that took a hit, she also unveiled a package for the tourism industry, which included measures like issuing five lakh tourist visas free of charge once the government resumes the process.
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The report said tax collections of the central government were resilient in the first two months of FY 2020-21 while a momentum was sustained in capital expenditure, particularly in the road and rail sector. It added that these factors augured well for a continued economic recovery driven by capital expenditures.
The report also said that the recently announced relief package was “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 Monetisation”.
Consumer sentiment likely to pick: Report
The review report added that consumption sentiment is likely to pick up with further enhancement of employment support under the Atmanirbhar Bharat Rozgar Yojana, targeted support to the urban poor through the credit guarantee scheme for on-lending by micro-finance institutions and wider Bharat-Net digitisation coverage.
Free foodgrain and boosted fertiliser subsidies under the package besides continued MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) implementation would serve as a cushion for rural demand in the upcoming quarters, the report said.
“Maintaining a rapid pace on vaccination and quickly bridging health care infrastructure gaps across both urban and rural areas would emerge as the most sustainable stimulus for durable recovery of the Indian economy,” it said.
The report said going forward, expansion of vaccination and strict adherence to Covid-appropriate behaviour will be a key safeguard against the emergence of a possible third wave. Speaking about rising food prices, the report said healthy monsoon coverage, rising Kharif sowing and unlocking of states is expected to ease the situation. It added that risks caused by a global demand-led recovery in commodity prices and input cost pressures remain.
The finance ministry report aired a caution saying resurgence of the delta variant infections, strong inflationary pressures, unequal access to vaccination and growing debt levels continue to add uncertainty to the global economic outlook.
