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, the Finance Ministry said in its monthly (September) economic review report on Sunday.
“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,” it said. 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 per cent in the GDP growth rate in the April-June quarter.
The economic review pointed out risks from spread of virus, even though it argued that India may have crossed the peak caseload. “The sustained spread of the virus poses a downside risk to short-term and medium-term growth rate. To combat these risks, the Government has strategically undertaken various important structural reforms encompassing various sectors. These will strengthen the fundamentals of the economy towards a strong and sustainable long-term growth,” the ministry said.
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 review stated that record kharif crop production led to an expansion rural demand, which is is reflected in registration of two wheelers/three wheelers/passenger vehicles along with tractor sales reaching/surpassing previous year levels in August.
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