Finance ministry report says economy witnessing V-shaped recovery

The Indian financial system is witnessing a V-shaped restoration because the Gross Domestic Product (GDP) has recorded a quarter-on-quarter progress of 23 per cent within the July-September quarter of this fiscal, in keeping with the Finance Ministry’s newest Monthly Economic Review.

The decline within the GDP narrowed to 7.5 per cent within the second quarter of this monetary 12 months, over 23.9 per cent in April-June quarter.

“The year-on-year GDP contraction of 7.5 per cent in Q2 of 2020-21 underlies a quarter-on-quarter surge in GDP growth of 23 per cent.

“This V-shaped recovery, evident at the half-way stage of 2020-21, reflects the resilience and robustness of the Indian economy. The fundamentals of the economy remain strong as gradual scaling back of lockdowns, along with the astute support of Atmanirbhar Bharat Mission has placed the economy firmly on the path of recovery,” the Monthly Economic Review for November mentioned.

The progress drivers have obtained the biggest help from agriculture adopted by building and manufacturing, it mentioned, including, the contact-sensitive providers sector has additionally contributed though primarily by logistics and communication.

The not too long ago celebrated festive season contributed to an increase in contemporary COVID-19 positive circumstances in India, though numbers have began to say no once more, a development seen in lots of different nations, it mentioned.

Consequently, it mentioned, world-wide, the months of October and November, 2020 have been of financial uncertainty with world composite PMI and items commerce exercise displaying a tepid improve whereas vitality and metallic costs world wide have moved in several instructions additional including to the uncertainty.

In common, it mentioned, inflation has softened in superior economies whereas climbing up additional in rising market economies reflecting a comparatively bigger impression of supply-side disruptions on economically extra challenged nations on this planet.

“High optimism among investors however continues unabated as seen in equity markets the world over. With further weakening of the US dollar in November, prospects of growth in the rest of the world have become stronger,” it mentioned.

Sharing the outlook in regards to the third quarter, the report mentioned there’s cautious optimism that world financial uncertainty doesn’t mirror itself in India however moderation of some excessive frequency indicators late within the month of November.

Overall improve in Rabi protection with adequately stuffed irrigation reservoirs bodes properly for the expansion of agricultural output in 2020-21, it mentioned.

Further, sustained demand for labour arising from improve in Rabi sowing has additionally contributed to progress in rural wages moreover propped up by improve in wages and employment era beneath Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

The extra allocation of Rs 10,000 crore within the newest package deal for Pradhan Mantri Garib Kalyan Rozgar Yojana would give an additional enhance to job creation within the rural sector and complement rural incomes.

Increase in minimal help costs for each Kharif and Rabi crops in 2020-21, and progress in rice procurement, have already been supplementing rural incomes within the nation, it mentioned.

Talking in regards to the draw back danger, the report mentioned, the unfold of a second wave of COVID-19 is a problem.

However, there’s cautious optimism that the steep plunges of the April-June quarter of 2020 might not resurface with important progress in vaccines and call intensive sectors more and more adapting to a digital regular.

The want of the hour is to observe COVID-appropriate behaviour and earnest statement of the laid down commonplace working tips until a vaccine is permitted and a big part is inoculated, it mentioned.