New Delhi: Finance Ministry The economy has started showing signs of revival with the impact of the second wave of the COVID-19 pandemic on the back of targeted fiscal relief, monetary policy and a rapid vaccination campaign, it said on Friday. The broad-based economic relief package extended to mitigate the second wave amounted to Rs 6.29 lakh crore. The ministry, in its monthly economic review, said the RBI is continuing with its efforts to calm market nerves and revive sectors with both backward and forward linkages and multiplier effects on growth.
To stimulate the economy and mitigate the financial impact of the coronavirus pandemic and lockdown, the Finance Minister Nirmala Sitaraman Last month, the country announced eight economic measures worth Rs 6.29 lakh crore to provide relief to individuals as well as businesses. Apart from the eight relief measures announced in health and other worst-affected sectors, Sitharaman also announced a stimulus package for the tourism industry, wherein five lakh tourist visas would be issued free of cost, after being released by the government. The total financial implication of the scheme will be Rs 100 crore.
The central government’s flexible tax collection in the first two months of the financial year 2020-21 and sustained momentum in capital expenditure, especially in the road and rail sector, bodes well for sustained economic recovery driven by capital expenditure, the report said. The report further said that the recently announced economic relief package was expected to give more oil to the wheels of the capex cycle through the implementation of the PLI scheme and streamlining of processes for PPP projects and asset monetization. Consumption sentiment is expected to rise with further increase in employment support under Atmanirbhar Bharat Rozgar Yojana (ANBRY), targeted support to the urban poor through credit guarantee scheme for lending by micro-finance institutions and comprehensive Bharat-Net digitization coverage, said the June Economic Review. It added that continuation of MGNREGA along with free food grains and increased fertilizer subsidy under the package will help meet rural demand in the coming quarters. “Keeping up the pace on immunization and rapidly bridging health care infrastructure gaps in both urban and rural areas will emerge as the most lasting impetus for the sustainable recovery of the Indian economy,” the report said.
Going forward, it said, further expansion of vaccination and strict adherence to COVID-appropriate behavior would be an important safeguard against the emergence of a possible third wave. On higher food prices, the report said, healthy monsoon coverage, gradually increasing kharif sowing and opening up of states are expected to reduce food cravings, and thus headline inflation. However, it said, risks remain on the back of correction in commodity prices on account of global demand and input cost pressures.
On global economic growth, it said it has continued its upward trajectory into June 2021. Falling COVID-19 infections and rapid vaccination consolidated the US recovery and renewed growth prospects in the euro area, it said, adding to global trade spurred global commercial flight and port activity, which contributes to Indian exports. reflects well. However, it said, a resurgence of delta-type infections, strengthening inflationary pressures, unequal access to vaccination and rising debt levels continue to pose substantial uncertainty to the global economic outlook.
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