Economy shows signs of revival from second wave, says finance minister

The Indian economy is showing signs of recovery from the debilitating impact of the pandemic’s second wave, bolstered by targeted fiscal relief, monetary policy measures, and a rapid vaccination drive, the finance ministry said on Friday.

“Maintaining a rapid pace on vaccination and quickly bridging health care infrastructure gaps across both urban and rural areas would emerge as the most sustainable stimulus for durable recovery of the Indian economy,” the ministry’s department of economic affairs said in its latest monthly economic report.

The Union cabinet on Thursday approved a ₹23,123 crore package to prevent a repeat of the devastating second wave that claimed thousands of lives and exposed India’s creaky healthcare infrastructure. Patients struggled to find hospitals beds, oxygen and medicines as the second wave raged across most parts of the country from March till May. Cases continue to pour in from some states, though they have subsided from the peak.

The ‘India Covid-19 Emergency Response and Health System Preparedness Package: Phase-II’ will be implemented by March 31, with the share of the Centre and states at ₹15,000 crore and ₹8,123 crore, respectively.

The finance ministry said as daily coronavirus cases and deaths have ebbed since the second half of May, the recovery momentum in several high-frequency indicators has gained pace. “India is on the move again with the total volume of e-way bills rising by 37.1% in June over May and 26% YoY. This augurs well for GST collections in subsequent months,” it said.

The ministry, however, said that the road to recovery remains uneven, with indicators such as port traffic, air traffic, PMI Manufacturing and Services showing a lag in rebounding from the second wave’s impact. “Resilient tax collections of the Central government in the first two months of FY21 and sustained momentum in capital expenditure, particularly in the road and rail sector, augurs well for pivoting targeted fiscal support for continued economic recovery,” it said.