Indian economy going through V-shaped recovery

The Finance Ministry in its latest Monthly Economic Review states that the Indian economy is going through a V-shaped recovery. Evident at the half-way stage of 2020-21, the V-shaped recovery reflects the resilience and robustness of the Indian economy.

The Review highlighted that the fundamentals of the economy remains strong as gradual scaling back of lockdowns, along with the astute support of Atmanirbhar Bharat Mission has placed the economy firmly on the path of recovery. The growth drivers received the largest support from agriculture, construction and manufacturing sectors. The Review noted that the contact-sensitive services sector also contributed although, mainly through logistics and communication.

Worldwide, the months of October and November 2020, have been of economic uncertainty with global composite PMI and goods trade activity showing a tepid increase while energy and metal prices around the world have moved in different directions, further adding to the uncertainty. The Review observed that inflation has softened in advanced economies, while climbing up further in emerging market economies, reflecting larger impact of supply-side disruptions on economically more challenged countries in the world. High optimism among investors, however, continues unabated as seen in equity markets the world over, it said.

Furthermore, the report shared the outlook about the third quarter. It said there is cautious optimism that global economic uncertainty does not mirror itself in India, nothwithstanding moderation of a few high frequency indicators in late November. In regards to agriculture, the report said overall increase in Rabi coverage with adequately filled irrigation reservoirs bodes well for the growth of agricultural output in 2020-21.

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Sustained demand for labor arising from increase in Rabi sowing has also contributed to growth in rural wages additional propped up by increase in wages and employment generation under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). Moreover, the additional allocation of Rs 10,000 crore in the latest package for the Pradhan Mantri Garib Kalyan Rozgar Yojana would give a further boost to job creation in the rural sector and supplement rural incomes as well.

With inputs from PTI