According to the Ministry of Finance, India’s economic recovery gained impulse in September, enthused by the ebbing of the COVID second wave, fast-paced vaccinations, and enhanced mobility, which is currently at around 90 % of the pre-pandemic level.
India’s cumulative COVID-19 vaccination coverage crossed the landmark 100 crore doses on Thursday, according to the Union Ministry of Health and Family Welfare.
Aditya Birla Group chairman Kumar Mangalam Birla said that the Indian economy is reviving in very good shape.
Speaking to ANI, Birla said, “I think India is doing well. I think this quarter has been a very good quarter almost every industry would vouch for that and I think that in the next few months we should be back to pre-COVID levels. So I think the economy is in very good shape.”
The agriculture sector continues to strengthen rural demand on the back of an estimated increase of Kharif production, record-high procurement of wheat and paddy in Rabi marketing season and ongoing Kharif marketing season respectively.
Amidst the easing of regional mobility curbs and the emergence of growth impulses, the industry is gaining lost ground, with the Index of Industrial Production (IIP) witnessing a broad-based Year on Year (YoY) growth of 11.5 % in July 2021, led by growth in capital goods and consumer durables.
Acceleration in YoY growth of eight-core industries index in August at 11.5 % to recover 104 % of its corresponding pre-pandemic level portends further strengthening of industrial growth in the coming months.
In synergy, the rise in PMI Manufacturing to 53.7 on the back of improved consumer demand and business confidence, coupled with PMI Services clocking a 55.2, establish a robust recovery.
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, said a Ministry of Finance statement.
Meanwhile, automobile registrations and sales remain affected by a global shortage of semiconductor chips.
With the restoration of supply chains, improved mobility, and softening food inflation, Consumer price index (CPI) inflation retreated to a four-month-low of 5.3 % in August 2021, clearly demonstrating that inflationary tendencies are pandemic induced and transitory. However, volatile prices in the international crude oil markets and upward-bound prices of edible oils and metal products may continue to pose concerns.
Meanwhile, International Monetary Fund earlier this month projected India’s growth rate at 9.5 % for 2021 and 8.5 % for 2022.
Tata Steel managing director and Confederation of Indian Industry (CII) president TV Narendran believes that the country will resume the growth trajectory that was there in the pre-pandemic era.
“The 9.5 % was our own GDP growth forecast. RBI has projected the same and now IMF has come with the same growth projection. More important is next year growth projection. Which is good. 8.5 % means India will be one of the fastest-growing large economies. Before the pandemic, this growth was coming back very strongly. The pandemic has delayed that growth, but now I believe that we will go back to the trajectory we were before the pandemic,” Narendran told ANI.
He further said Many sectors are already at a pre-pandemic level like the Metal sector. But aviation, hospitality, travel industry or auto industry are yet to reach pre-pandemic level. The auto industry has demand but due to semiconductor issues, there is a supply problem.
India’s economy had contracted by 7.3 % in 2020 due to the impact of the COVID-19 pandemic.
Sanjiv Bajaj, chairman and managing director of Bajaj Finserv said, “IMF projections are a very encouraging projection. The economy is back on track. Almost back to 80-90 %. Many industries are performing above 100 %. We were preparing for the third wave, but we have now improved health infrastructure. The economy is opening up and cities are opening well. We have seen quarter on quarter improvement. This economy is capable to come back very strong as we go in the next calendar year.”
The swift recovery with growth impulses visibly transmitted to all sectors of the economy.
According to the Ministry of Finance, sustained and robust growth in agriculture, a sharp rebound in manufacturing and industry, resumption of services activity and buoyant revenues are suggesting that the economy is progressing well.