Q1 testimony to strong macroeconomic fundamentals: Finance

 

The V-shaped recovery within the half-moon of 2021-22, despite the brutal second wave of the coronavirus pandemic, may be a testimony to India’s strong macroeconomic fundamentals, consistent with the Finance Ministry.

In its latest Monthly Economic Review, the Finance Ministry also expressed concern over high incidence of COVID-19 cases in Kerala and Maharashtra and underlined the necessity for strengthening pandemic control and management in these two states.

The Indian economy grew by 20.1 percent within the half-moon of the present fiscal year reaffirming, “India’s resilient V-shaped recovery despite an intense second wave,” it said.

Hit hard by the coronavirus pandemic, the economy had dipped by 24.4 percent during the primary quarter of the previous fiscal.

Going forward, the report said the agriculture sector continues to supply comfortable prospects with Kharif sowing at 101 percent of normal levels as on September 3, despite a 9 percent deficient monsoon thus far within the year.

Record-high paddy procurement and increasing tractor sales augur well for strengthened rural demand within the coming months, it said, adding, Industry is steadily gaining lost ground with June’s IIP witnessing a broad-based growth, having recovered on the brink of 95 percent of pre-pandemic levels of June 2019.

More recently, the eight-core industries index for July 2021, rose by 9.4 percent year-on-year (YoY)with all sectors except petroleum and refinery products surpassing pre-pandemic levels, it said.

“The fast-paced recovery is further evident in growth of power consumption, rail freight, highway toll collections, e-way bills, digital transactions, air passenger traffic and robust GST collections. India’s PMI Composite index including both manufacturing and services is comfortably placed at 55.4, signalling commencement of economic expansion,” it said.

On the flip side it said, the looming fear round the Delta variant of COVID-19 has once more cast a shadow necessitating sustained precautions against it with greater specialise in testing, tracking and adopting COVID-19 appropriate behaviour.

Kerala remains a priority accounting for around 60 percent of daily new cases within the country and reporting the very best daily deaths across all states, it said.

While experts have cautioned against a possible third wave within the oncoming festive months, pandemic control and management must be strengthened with Maharashtra and Kerala presently accounting for 70 percent of the active cases within the country, it added.

On the revenue collection side, it said, the central government finances improved during April 2021, to July 2021 over the corresponding period of previous year, with both direct and indirect taxes showing a big YoY growth.

Observing that the robust recovery in tax collections augurs well for the govt to supply the specified budgeted support to the economy, the report said, the recent decision to repeal the retrospective law introduced in 2012, further reflects the commitment of the govt towards providing a stable and predictable tax regime for all stakeholders.