Target fiscal relief, monetary policy measures and a rapid vaccination drive is helping the Indian economy onto the path recovery from the impact of the second wave of COVID-19, says the Finance Ministry.
The Department of Economic Affairs, in its latest monthly economic report, said 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.
As such, the Cabinet on Thursday approved a Rs 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. 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. It highlight that 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.
The Finance Ministry also admitted that recovery remains uneven with indicators such as port traffic, air traffic, PMI manufacturing and services demonstrating lagged revival from the impact of the second wave of infections. “Resilient tax collections of the central government in the first two months of FY20-21 and sustained momentum in capital expenditure, particularly in the road and rail sector, augurs well for pivoting targeted fiscal support for continued economic recovery.”
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The report said 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. The ministry expects consumption sentiment is to pick up with further enhancement of employment support under the Atma Nirbhar Bharat Rozgar Yojana (ANBRY) and wider BharatNet digitization coverage. Free food grains 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.
The ministry said maintaining a rapid pace on vaccination and quickly bridging healthcare infrastructure gaps across both urban and rural areas would emerge as the most sustainable stimulus for durable recovery of the Indian economy.
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