India on path of swift recovery: FinMin report

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SME Times News Bureau | 11 Oct, 2021
As the post-pandemic economic activity in the country picks up pace, the Finance Ministry has said that India is well-placed on the path to swift recovery with growth impulses visibly transmitted to all sectors of the economy.

The Monthly Economic Review for September 2021 released by the Department of Economic Affairs (DEA) on Monday said that 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.

"Strategic reforms undertaken so far along with new milestones in vaccination drive have enabled the economy to navigate the ravaging waves of the Covid-19 pandemic," it said.

The ministry noted that ebbing of the second wave coupled with rapid progress in vaccination bode well for revival of consumer sentiment, the upcoming festive season, but it warrants caution and continued adoption of Covid-19 appropriate behaviour.

It said that the latest 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.

While automobile registrations and sales remain affected by global shortage of semiconductor chips, the post-monsoon festive season is expected to boost demand, the report said.

It added that continued decline in growth of currency in circulation since August is indicative of decreasing demand for precautionary savings with progressive reopening of the economy.

On the equity market, the report has said that it remains buoyant on reassuring indications of both global and domestic economic recovery.

FPI flows into the country remain robust with India reporting highest inflow of $3 billion in September among emerging market economies. Thus far in this fiscal, India is reported to have received FPI worth $7.2 billion, the second highest after Brazil's $9 billion.

These historic highs have engendered a bullish run in domestic equity markets as record additions of new Demat accounts broaden the base of equity investment in the country, the report said.

The monthly report of the finance ministry also cited that global investor confidence in India stays intact with the country attracting total FDI inflow of $ 27.37 billion during the first four months of FY 2021-22, 62 per cent higher as compared to corresponding period of FY 2020-21, with the automobile sector being one of the major beneficiaries.

India's foreign exchange reserves comfortably stood at $638.65 billion as on September 27, 2021.

In tandem with growth impulses witnessed across the economy, the rate of growth of bank credit stood at 6.7 per cent YoY in the fortnight ending September 10, 2021 compared to 5.3 per cent in the corresponding period of the previous year, the finance ministry said.

Sectorally, the credit offtake by agriculture and allied activities, and micro, small and medium industries continued to perform well in August. Growth uptick in personal loans augurs well for improved consumption spending in festive months.