Indian economy shows signs of revival from second wave impact: Finance Ministry 

The Department of Economic Affairs (DEA) in the Union Finance Ministry today said that the Indian economy is showing signs of revival from the second wave of the Covid-19 pandemic.

DEA also pointed out that while supply side disruptions stoked retail inflation, healthy monsoon, unlock and kharif sowing are expected to bring reprieve even as global demand-led recovery risks continue.

"The Indian economy is showing signs of revival from the impact of the COVID-19 second wave on the back of targeted fiscal relief, monetary policy measures, and a rapid vaccination drive," DEA said in the monthly economic report for June released today.

"The broad-based economic relief package, extended to mitigate the second wave, amounted to Rs 6.29 lakh crore. 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 report said.

"With rapid and focused COVID-19 vaccination efforts, India’s average daily vaccination rate in June 2021 has doubled to 41.3 lakh doses compared to 19.3 lakh in May, crossing the 36 crore mark in its cumulative vaccination coverage," the report added.

The report said inflationary pressures took an upturn in May 2021 with headline inflation (CPI-C) and WPI inflation touching a high of 6.3 percent and 12.94 per cent respectively. "Supply side disruptions in states and unfavourable base effects drove the broad-based momentum in retail inflation across food, fuel and core categories," the report said.

"Healthy monsoon coverage, gradually rising Kharif sowing and unlocking of states is expected to ease food, and thereby headline inflation. However, risks due to global demand-led recovery in commodity prices and input cost pressures remain," it added.

Substantiating its claim on the ‘signs of revival’, the DEA report points to GST e-way bills volumes, power consumption and vehicle registrations.

"India is on the move again with the total volume of e-way bills rising by 37.1 per cent in June 2021 over May 2021 and 26 per cent YoY. This augurs well for GST collections in subsequent months," said the report. This essentially means that monthly GST revenue which fell below the Rs 1 lakh crore mark in June after eight months of buoyant revenues may remain above the psychological level in the next month. 

The report also said that power consumption growth improved to 4.5 per cent sequentially in June 2021 over May and 8.4 per cent YoY, even though it remained slightly below pre-COVID 2019 levels.

"Rail freight continues to sustain its momentum with freight loading higher by 11 per cent in June 2021 compared to June 2019 and 20 per cent higher compared to June 2020. While localised lockdowns and mobility restrictions dented automobile sales in May 2021, June data on vehicle registrations depict revitalisation of demand as states unlock," the report added.

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