The Finance Ministry on its monthly (September) economic review report has exhibited ‘credible signs’ of economic growth towards normalcy and the government is not averse to taking any further measures to ameliorate the suffering of people. The report also states that the economic recovery in India has gained momentum after opening up and a series of measures taken by the government, but sustained spread of the virus poses a downside risk to short-term and medium-term growth rate.

“With India unlocking by the day, consequent demand resurgence is palpable in many sectors. Economic indicators allude to a steady recovery in almost all sectors, with some sectors shooting above their previous-year levels as well. This is despite headwinds of increasing covid cases in non-metro cities and rural areas and rising food prices. Positive results from the implementation of Aatmanirbhar Bharat package and unlocking of the economy are evident in India’s high-frequency real sector indicators of September,” the finance ministry said in its latest Monthly Economic Review. In its August review, the ministry had noted that India imposed the most stringent lockdowns among the countries most affected by the Covid-19 pandemic, resulting in a sharp contraction of 23.9 percent in the GDP growth rate in the April-June quarter.

During September, India’s merchandise exports entered the positive territory for the first time in seven months, growing at 5.3 percent. Goods and Services Tax (GST) collections also grew 3.9 percent in September for the first time this fiscal. Also, the manufacturing purchasing managers’ index (PMI) rose to 56.8, the highest since January 2012, supported by accelerated increases in new orders and production, renewed expansions in

Positive results from the implementation of Aatmanirbhar Bharat package and unlocking of the economy are evident in India’s high-frequency real sector indicators of September

export sales as well as an improvement in business confidence. A recovery in rail freight helped revenues to grow for the first time since March in August and early September. Easing of inter-state movement restrictions, quarantine policy and unlocking were also accompanied with recovery in rail passenger earnings.

Data for the 14-day period from September 17-30 suggests that India may have crossed the peak of Covid-19 caseload. During this period, the seven-day moving average of daily positive cases has steadily fell from about 93,000 to 83,000 while the seven-day moving average of daily tests rose from about 1,15,000 to 1,24,000. The pandemic however is far from over. Yet, the declining positivity rate at the all India level sets the stage to further push up the frontiers of economic recovery, it said.

The finance ministry said as intermittent lockdowns cease, containment zones become fewer and smooth operation of supply chains resumes, a fall in retail inflation may boost personal consumption expenditure. “The availability of domestic liquidity matches that in the external sector although at this stage it is resulting in higher growth of demand deposits. This highlights the issue of rising precautionary savings which are, in turn, limiting growth in personal consumption and acceleration in activity levels,” it said.

To combat the downside risks of covid-19, the ministry said the government has strategically undertaken important structural reforms encompassing various sectors. “These will strengthen the fundamentals of the economy towards a strong and sustainable long-term growth. The enabling policy environment and initiatives taken by all stakeholders to seize the available opportunities will actualize the growth potential of the Indian economy,” it added.