Prompt Policy measures by Government and RBI in a calibrated manner will reinvigorate the economy at the earliest with minimal damage
The Centre has said Unlock 1.0 has gone a long way in reviving the economy which was battered by the country-wide lockdown to contain the coronavirus pandemic in its early stages.
Adding that the lockdown “gave a respite to ramp up the health and testing infrastructure in the country,” a statement from the Ministry of Finance & Corporate Affairs, however, also admitted the strict lockdown and social distancing measures affected the economy “adversely.”
“India has entered the ‘Unlock India’ phase from June 1 with a phased resumption of services and businesses. The Government and the Reserve Bank of India (RBI) have taken prompt policy measures – both short term and long term – in a calibrated manner to reinvigorate the economy at the earliest with minimal damage,” it stated.
The Ministry noted that reforms in the agricultural sector – which is not “large in relation to industry and services” in terms of GDP, would build efficient value chains and ensure better returns for farmers. “Agriculture remains the foundation … and with a forecast of a normal monsoon, should support the rebooting of the Indian Economy,” it said.
It also noted that manufacturing sector has been “resilient”, adding: “Starting from scratch, within a period of two months, India has become the world’s second-largest manufacturer of Personal Protective Equipment (PPE).”
It also noted that early green shoots of economic revival were visible in May and now in June with real activity indicators such as electricity and fuel consumption, inter and intra-state movement of goods, retail financial transactions witnessing pick-up.
Here are the improvements the Centre noted in key economic indicators:
Agriculture
> Wheat procurement from farmers by government jumped 382 Lakh Metric Tonnes (LMT) on June 16 – an all-time high, surpassing previous record of 381.48 LMT in FY13. This has benefitted 42 lakh farmers who have received close to Rs 73,500 crore as Minimum Support Price (MSP) for the grain.
> Procurement of Minor Forest Produces (MFP) MSP hit record Rs 79.42 crore under the MFP scheme in 16 states, and will benefit tribals.
> 13.13 million hectares of Kharif crops – 39 percent higher year-on-year (YoY), was recorded as of June 19. Jump has been seen in oilseeds, coarse cereals, pulses and cotton crop.
> Fertilizer sales surged to 40.02 lakh tonnes or almost 98 per cent YoY in May, reflecting a robust agricultural sector, it said.
Manufacturing
> India’s PMI Manufacturing and Services showed a lower contraction in May at 30.8 and 12.6 respectively over April (27.4 and 5.4 respectively).
> Electricity consumption saw a lower contraction in growth rates from (-)24 per cent in April to (-)15.2 per cent in May to (-)12.5 per cent in June (till 21st June). In June, electricity consumption has continuously improved from (-)19.8 per cent in the first week to (-)11.2 per cent in the second week to (-) 6.2 per cent in the third week of June.
> Total assessable value of E-Way bills picked up by a massive 130 per cent in May 2020 (Rs. 8.98 lakh crore) compared to April 2020 (Rs. 3.9 lakh crore), though lower than the previous year and pre-lockdown levels. Value of E-Way bills generated between 1st and 19th June stood at Rs. 7.7 lakh crore, with 11 days left for the month to complete.
> Consumption of petroleum products, a major indicator reflecting consumption and manufacturing activity in the country increased by 47 per cent from 99,37,000 metric tonnes in April to 1,46,46,000 metric tonnes in May. Consequently, YoY contraction in consumption growth of petroleum products was much smaller at (-)23.2 per cent in May against (-)45.7 per cent in April. In June, growth in consumption of petroleum products is expected to be still higher after one month of Unlock 1.0.
Services
> Railway freight traffic improved by 26 percent in May (8.26 crore tonnes) over April (6.54 crore tonnes), though still lower than previous year levels. The improvement is likely to continue in June in sync with growth in the movement of goods on National Highways.
> Average daily electronic toll collections increased from Rs 8.25 crore in April 2020 to Rs 36.84 crore in May, rising more than four times. In the first three weeks of June, it has improved further to Rs 49.8 crore.
> Total digital Retail financial transactions via NPCI platforms increased sharply from Rs 6.71 lakh crore in April 2020 to Rs 9.65 lakh crore in May. The trend is expected to continue in June driven by a sustained pick-up in real activity.
Here are the improvements the Centre noted in key monetary Indicators:
> With RBI’s efforts towards ensuring adequate liquidity, private placement of corporate bonds picked up sharply by 94.1 percent (YoY growth) in May (Rs. 0.84 lakh crore) as compared to a contraction of 22 percent in April (Rs. 0.54 lakh crore). June is likely to see a still larger placement as excess liquidity persists in the system.
> Average assets under management (AUM) of mutual funds increased by 3.2 percent to Rs.24.2 lakh crore in May 2020 from Rs. 23.5 lakh crore in April 2020. A contraction in YoY growth in the indicator also fell from (-)6.9 percent in April to (-)4.5 percent in May.
> India’s forex reserves at USD 507.6 billion as on June 12, continue to provide a crucial cushion to external shocks on the back of higher foreign direct investment (FDI), portfolio flows and low oil prices. FDI in India recorded an inflow of $73.45 billion in FY 2019-20, an increase of 18.5 percent over the previous fiscal.
“The commitment of the Government towards both structural reforms and supportive social welfare measures will help build on these ‘green shoots’. The resolve for ‘Atmanirbhar Bharat’ will be strengthened with the collective effort of all stakeholders and contribute to rebuilding a strong vibrant Indian economy,” the statement read.WEBINAR: Tune in to find out how term insurance can provide risk protection during tough times. Register Now!
