The Ministry of Finance on Tuesday said the prospects of India's economic recovery were fragile and required constant monitoring as the number of coronavirus cases is on a steady rise. The increase in cases have led states to call for staggered, frequent lockdowns that have posed a challenge in the economic revival. "India is well on the path to a recovery from a trough in April, ably supported by proactive government and central bank policies. However, the increase in COVID-19 cases and subsequent intermittent lockdowns make the recovery prospects fragile and call for constant and dynamic monitoring," stated the Department of Economic Affairs' economic report for July.
The report said that the economic recovery is linked to the evolution of the COVID-19 infection curve. It added that the top 12 growth-driving states have accounted for 85 per cent of the case load, with 40 per cent concentrated in top two growth-drivers, Maharashtra and Tamil Nadu.
The department stated in its report that the worst seemed to be over as high-frequency indicators showed recovery in June as compared to May and April. The indicators include GST collection, electricity consumption, petrol and diesel consumption, highway toll collection and rail freight and passenger data.
It expects the push for growth emerging from rural India, especially helped by recent reforms in agricultural sector. "Urban India and the world at large, however, continue to fight the growing menace of the pandemic, simultaneously on the health and economic front," it stated.
On Tuesday, the EcoScope report from Motilal Oswal Financial Services Limited (MOFSL) stated that India's real GDP is likely to have contracted nearly 18-20 per cent on-year in the April-June quarter of fiscal 2020-21. The GDP may have shrunk 5 per cent (YoY) in July as muted e-way bill registration and power generation suggested.
India recorded a single-day spike of 52,509 new cases and 857 deaths. The country's COVID-19 tally has reached 19,08,255 including 5,86,244 active cases, 12,82,216 discharged and 39,795 deaths.