The Ministry of Finance's Department of Economic Affairs, in its monthly economic review for October, has said that India's latest milestones in COVID-19 vaccination and teeming festivities lend renewed optimism to the economic recovery. This also signals further improvement on the demand and supply-side and greater jobs in the near future.
The report said India's economic recovery gathered steam in the festive season, recording a decade high Diwali sales of Rs 1.3 lakh crore, as per the Confederation of All India Traders.
"Improving COVID-19 situation amid a high business and consumer spirits has delivered sustained economic recovery in October 2021 as well," the report highlighted.
On the global front, however, recovery continues to be impacted by prolonged supply constraints and input cost inflation. Notably, IMF, in its October 2021 update, foresaw improved global growth prospects at 5.8 per cent in 2021 and 4.9 per cent in 2022.
The WHO (World Trade Organisation), in its October forecast, confirmed favourable trade prospects on the resurgence in global economic activity and vaccine dissemination.
The ministry said all of this plays well for India's export performance in the near future, which also lends credence to IMF projecting India to become the fastest growing economy, among major countries, in the current and the following year.
India administered 100 crore vaccinations in 10 months to become the second country in the world to reach this milestone. By October end, over 85 per cent of the adult population has received at least one dose of the vaccine, with 38 per cent fully vaccinated.
Among different sectors contributing to the growth, the agricultural sector continues its strong presence in economic recovery, with higher acreage of rabi sowing, improved reservoir levels, and adequate availability of fertilisers and seeds.
Rural demand remains upbeat with month-on-month (m-o-m) improvement in tractor and two
and three-wheeler sales in September 2021. The industrial production also expanded in August to reach 103 per cent of its pre-pandemic August 2019 level, with manufacturing witnessing full recovery in most of the use-based categories.
The seasonally adjusted PMI Manufacturing also expanded to an 8-month high of 55.9 in October, which affirms the beginnings of a prolonged demand recovery.
India's retail inflation also moderated to 4.4 per cent in September 2021. However, core inflation remains sticky at 5.9 per cent, driven mostly by a continuous increase in international oil prices.
The external sector continues to be a critical part of India's economic revival, the ministry report said. India's merchandise exports in October 2021 crossed the $30 billion mark for the seventh consecutive month.
In its outlook, the ministry said Atmanirbhar Bharat Mission, encapsulating major structural reforms, continues to play a critical role in shaping India's economic recovery. "Armed with necessary macro and micro growth drivers, the stage is set for India's investment cycle to kickstart and catalyse its recovery towards becoming the fastest growing economy in the world," the report said.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today