India on recovery path but second COVID wave tripping economies: FM

A second wave of coronavirus infection may have impacted global economies, but the Indian economy is riding high against the COVID-19 wave showing a V-shaped recovery, the Union Finance Ministry said on Tuesday (January 5).

The Department of Economic Affairs said in its monthly economy review for December that economic fundamentals are strong after gradual rollback of lockdown. “The support of Atmanirbhar Bharat Mission has placed the economy firmly on the path to recovery. This is in alignment with economic recovery across the globe reflecting a world-wide pick-up in business and consumer confidence,” the review report stated.

“The GDP contraction of 7.5 per cent in second quarter underlies a quarter-on-quarter surge in GDP growth of 23 per cent. This V-shaped recovery, evident at the half-way stage of FY21, reflects the resilience and robustness of the Indian economy,” the report further highlighted.

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Arrival of the vaccine, too, has come as a boost for the economy. “The New Year has dawned with the approval of long-awaited Covid-19 vaccine and initiation of vaccination drives in various countries. This gives strength to the optimism on both health and economic fronts despite continuing surge in global cases and the potential challenge of a mutant strain,” the report stated.

However, the finance ministry report gave a note of caution. “The prospects of a vaccine are encouraging, but we need to remain on guard till it is approved and permeates to a large section of the population,” the report underlined.

The Ministry of Home Affairs has already said that the need of the hour is to “follow Covid-appropriate behavior”.

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The finance ministry report highlighted the success of the agriculture sector, which clocked 3.4% growth in the first two quarters of 2020-21, despite an overall slump in the economy.

“Rise in minimum support prices accompanied by record procurement, and accelerated wage employment generation through MGNREGS, bodes well for rural incomes and bears testimony to PMGKY’s success in alleviating rural distress. This rise in rural incomes is mirrored in the healthy, though moderated, sales in passenger vehicles, two and three wheelers and tractor, and a rebound in vehicle registrations for the first time after March 2020,” the review said.