Economic Indicators Show Recovery, Claims FinMin

With gradual unlocking of COVID-19 restrictions, the worst on the economic front seems to be over as high-frequency indicators show improvement, according to the latest monthly report released by the Ministry of Finance on Tuesday.

The indicators include index of industrial production, purchasing managers index, power generation, production of steel and cement, railway freight, traffic at major ports, air cargo and passenger traffic, e-way bill generation capturing the inter-state movement of goods, consumption of petroleum products and motor vehicle registrations among others.

However, risks on account of rising COVID-19 cases and intermittent state lockdowns remain, warns the 37-page report by the Department of Economic Affairs.

Inflation eased in June relative to the previous two months, indicating weak demand pressures and food supply chain recoveries. Volatility in most of the essential commodity prices stabilised reflecting their uninterrupted availability.

Lower inflation, nonetheless, is supportive of lower interest rates and benchmark bond yields that further softened in June.

The report said growth in money supply is commensurate with potential demand for credit in the commercial sector, although part of the growth has been driven by a surge in net foreign exchange assets.

The government has been deploying surplus liquidity available with banks to finance critical support to the economy damaged by the pandemic.

Although this has challenged the fiscal position, the government has been rationalising expenditure to ease the fiscal burden. Goods and Services Tax collections also provided some respite with year-on-year contraction falling from 38.2 per cent in May to 14 per cent in July.

“On the external front, India continues to attract robust foreign direct investments. Foreign portfolio investment inflows also rebounded to a 15-month high in June, reflecting the unshaken belief of foreign investors in India’s macroeconomic fundamentals,” said the report.

As a result, the Indian rupee recovered to 75.53 per US dollar by June-end as compared to the previous month-end.

Since the onset of the pandemic in India, stronger recovery of exports ensured that India registered a trade surplus of 0.8 billion dollars in June despite rising crude and gold prices.

This follows a current account surplus in the January to March quarter for the first time in more than a decade. On the back of buoyant FDI, the resurgence of FPI flows and current account surplus, foreign exchange reserves crossed half a trillion mark in June.

This safeguards a year of India’s imports. Finally, India’s persistently low external debt continues to add resilience to the external sector, a necessary safeguard in COVID-19 times, said the report. (ANI)

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments

We use cookies to give you the best online experience. By agreeing you accept the use of cookies in accordance with our cookie policy.

Privacy Settings saved!
Privacy Settings

When you visit any web site, it may store or retrieve information on your browser, mostly in the form of cookies. Control your personal Cookie Services here.

These cookies are essential in order to enable you to move around the website and use its features. Without these cookies basic services cannot be provided.

Cookie generated by applications based on the PHP language. This is a general purpose identifier used to maintain user session variables. It is normally a random generated number, how it is used can be specific to the site, but a good example is maintaining a logged-in status for a user between pages.

Used on sites built with Wordpress. Tests whether or not the browser has cookies enabled
  • wordpress_test_cookie

In order to use this website we use the following technically required cookies
  • wordpress_test_cookie
  • wordpress_logged_in_
  • wordpress_sec

Decline all Services
Accept all Services
Would love your thoughts, please comment.x