Amid fears of a third wave of the COVID-19 pandemic, the economy is recovering. Besides enhanced business and industrial activities, several broadbased indicators are presently indicating a strengthening economy, and it is now widely expected that better days are not far off. Several credit rating agencies have also forecast this, and according to the RBI, overall economic activity is on the cusp of a ‘strengthening revival’, with mobility rapidly improving and the job market recouping.

The release of quick estimates of IIP for the month of September, 2021 shows a sustained increase in industrial production. The index has grown from an average of 121.3 in Q1 to 130.2 in Q2. Also, indexes for manufacturing, capital goods and consumer durables show healthy recovery in industrial activities, investment and consumption. PMI services has accelerated to a decadal high of 58.4 in October, 2021, suggesting a strong revival in contact-based services sector.

Inflation data shows that annual CPI inflation has declined from 5.6 per cent in Q1 to 5.1 per cent in Q2 and it is even lower at 4.5 percent in October of FY 2021-22. Similarly, food inflation has declined from 4 percent in Q1 of FY 2021-22 to 2.6 percent in Q2 and further to 0.8 percent in October, showing that supply side disruptions have considerably eased. Outstanding credit of the scheduled commercial banks has been steadily rising, with retail credit in particular noticeably increasing.

While exports crossed $30 billion for the seventh successive month in October, thus emerging as the engine of growth for the economy, several High Frequency Indicators including E-way bills, power consumption and GST collections are indicating higher level of domestic economic activities. Similarly, tractor sales hit a record high in October 2021, 25 percent higher than September, 2021 volumes, thus indicating sustained growth in the agricultural sector.

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