The union finance ministry has said that the ongoing second wave of the Covid-19 pandemic will have a muted economic impact in comparison to the first wave. In its economic review for the month of April released today, the ministry observed, "The second wave of COVID-19 has posed a downside risk to economic activity in the first quarter of FY 2021-22."
"However, there are reasons to expect a muted economic impact as compared to the first wave. Learning to 'operate with COVID-19', as borne by international experience, provides a silver lining of economic resilience amidst the second wave," said the report. The report also said that the fiscal position of the government has witnessed improvement with "revival in the economic activities during the second half of 2020-21".
"Net indirect tax collections for 2020-21 were 8.2 per cent higher than the revised estimates (RE) and 12.3 per cent over collections in 2019-20. Central GST collections during 2020-21 are 106 per cent of RE though 8 per cent lower than the last year's collection. In the second half of 2020-21, GST collections registered a good growth and collections exceeded Rs 1 lakh crore in each of the last six months owing to economic recovery. GST collections registered another record high of Rs 1.41 lakh crore in April, indicative of continual economic recovery," said the report.
"In April 2021, economic recovery manifested in the rising import growth of 166 per cent and 7 per cent over 2020 and 2019 levels respectively," the monthly economic report added.
"Exports, too, grew by 197 per cent over 2020 levels and 16 per cent over 2019 - the significant growth compared to 2019 provides a tentative indicator of the positive impact of the policy focus through, inter alia, the Production Linked Incentive Scheme. Overall, India registered a trade deficit of US$15.24 billion in April 2021," the report said.
Acknowledging the role of vaccine as doubly effective in "battling the spread and shielding the economy", the ministry called for a global co-operation on vaccine. "Global cooperation is critical to ensuring availability of vaccines in all countries and addressing inter-country disparities in vaccination rates at the earliest," the report added.
It may be noted that major brokerages have downgraded the Indian GDP projections for the current financial year. While Nomura has downgraded India's GDP growth projection for the current financial year to 12.6 per cent from 13.5 per cent earlier, JP Morgan has lowered it to 11 per cent from 13 per cent earlier. UBS curtailed its growth forecast to 10 per cent from 11.5 per cent.