India’s COVID-19 infections may have already peaked last month, setting the stage for a “further push up the frontiers of economic recovery”, the Union Finance Ministry said on Sunday, listing several indicators from September that “allude to a steady recovery across almost all sectors”.
The economic division of the Finance Ministry has pointed to several green shoots from the months of August and September, which combined with the healthy monsoon, augur well for a recovery after India’s growth slipped by 23.9% in the first quarter of 2020-21.
“With India unlocking by the day, consequent demand resurgence is palpable in many sectors. Economic indicators allude to a steady recovery in almost all sectors, with some sectors shooting above their previous-year levels as well. This is despite headwinds of increasing COVID cases in non-metro cities and rural areas and rising food prices,” the Ministry said in its economic review for September.
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“Data from September 17 to 30 suggests that India may have crossed the peak of COVID-19 case-load. During this period, the seven-day moving average of daily positive cases has steadily declined from about 93,000 to 83,000, while the seven-day moving average of daily tests have risen from about 1,15,000 to 1,24,000,” the review said.
The pandemic, however, is far from over and to revive growth sustainably, it is imperative that all stakeholders “get into the act as remaining restrictions on access and mobility are further eased”, the Ministry said, advocating a greater focus on “self-protection with more due precautions” than “social distancing” alone.
Positives from package
Terming the partial recovery as proof of “positive results” from the Atma Nirbhar Bharat package, the review said the structural reforms undertaken by the government in various sectors could combat the “downside risk to short-term and medium-term growth” posed by the sustained spread of the virus.
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India’s “probable growth path” is visible in the latest assessment of the economy by S&P Global Ratings, which expects the country’s economy and fiscal position to “stabilise and begin to recover from 2021 onwards,” the Finance Ministry said.
Among signs of a recovery in industrial output and manufacturing, the Ministry listed the positive growth in exports, recorded in September for the first time since March and the Manufacturing Purchasing Managers’ Index hitting the highest point since January 2012 in September.
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Contraction in output of eight core sectors was lower in July and August than the 12.9% shrinkage reported in June, and output prices rose for the first time in six months, reflecting an uptick in input costs, the Ministry pointed out.
GST revenue rises
GST collections hitting a six-month high in September, along with a spurt in highway traffic movement reflected in toll collections surpassing their pre-pandemic levels in the same month, suggests “bustling activity and pent-up demand” even as power consumption in September was higher than a year ago, the Ministry said.
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Agriculture, the only sector to grow in the first quarter, remains in a sweet spot, the Ministry said, with India recording above normal rain for the second year in a row and reservoir levels at their highest in ten years.
Stressing that this bodes well for rural demand, the Ministry said tractor sales and registrations were growing already, while sales of passenger vehicles as well as two- and three-wheelers were gaining momentum, “signaling pent-up demand as well as rise in private mode of transportation due to COVID-19”.
