Economic recovery gaining momentum, growth seen across sectors: Finance Ministry

With the number of coronavirus cases declining in the country and increasing vaccination numbers, the economic recovery gained further momentum in September and the growth impulses seem to be transmitted to all sectors, the Finance Ministry has said.
 
However, the global economic recovery continues to be challenged by uneven rebound across countries, cost push inflationary pressures, and inequitable vaccine roll out between advanced and emerging economies, the Department of Economic Affairs said in its monthly economic review for September 2021.
 
With the reduction in travel curbs and emergence of growth impulses, industry is gaining the lost ground, with Index of Industrial Production (IIP) witnessing a broad-based year-on-year (YoY) growth of 11.5 per cent in July 2021, led by growth in capital goods and consumer durables, the report said.
 
"Acceleration in YoY growth of eight-core industries index in August at 11.5 per cent to recover 104 per cent of its corresponding pre-pandemic level portends further strengthening of industrial growth in the coming months. In synergy, rise in PMI Manufacturing to 53.7 on the back of improved consumer demand and business confidence, coupled with PMI Services clocking a 55.2, establish a robust recovery," it said.
 
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The report also mentioned the "impressive" increase in employment by 29 per cent to 3.08 crore for establishments with 10 or more employees in nine selected sectors as per the estimates of Labour Bureau's Quarterly Employment Survey for April-June 2021.
 
The trends in high frequency economic indicators in August and September further indicate a broad-based recovery evidenced in sustained improvement in power consumption, rail freight activity, e-way bills, robust GST collections, highway toll collections posting a 21-month high, sequential uptick in air freight and passenger traffic, and quantum leap in digital transactions, the Department of Economic Affairs said.
 
Besides, the continued decline in growth of currency in circulation since August is indicative of decreasing demand for precautionary savings with progressive reopening of the economy.
 
The agriculture sector continues to strengthen rural demand on the back of estimated increase of Kharif production, record-high procurement of wheat and paddy in Rabi Marketing Season, and ongoing Kharif Marketing Season, respectively. "Satisfactory monsoon promises similar benefits in future as well," it added.
 
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On inflation, the report said that CPI inflation retreating to a four month-low of 5.3 per cent in August 2021 demonstrates that inflationary tendencies are pandemic induced and transitory. "However, volatile prices in the international crude oil markets and upward-bound prices of edible oils and metal products may continue to pose concerns."
 
The report said that credit offtake by agriculture and allied activities, and micro, small, and medium industries continued to perform well in August, and the growth uptick in personal loans augurs well for improved consumption spending in the festive months.
 
Besides, the external sector continues to offer bright prospects to India's growth revival as the country's merchandise exports crossed $30 billion mark for the sixth consecutive month in fiscal year 2021-22.
 
However, it warned that while the ebbing of second wave, coupled with rapid progress in vaccination, bode well for revival of consumer sentiment, the oncoming festive season warrants caution and continued adoption of Covid-19 appropriate behaviour.
 
"India is well-placed on the path to swift recovery with growth impulses visibly transmitted to all sectors of the economy. Sustained and robust growth in agriculture, sharp rebound in manufacturing and industry, resumption of services activity and buoyant revenues are suggesting that economy is progressing well," it said.

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