New Delhi, July 9 | The Finance Ministry has cautioned against inflationary risks to the economy due to a global demand-driven recovery in commodity prices and higher input costs.
The monthly economic review for June 2021 released by the Department of Economic Affairs (DEA) said inflationary pressures intensified in May 2021 and headline inflation (CPI-C) and WPI inflation peaked at 6.3 per cent and 12.94 per cent, respectively. Arrived. .
Supply side disruptions and adverse base effects across states drove broad-based momentum in retail inflation across food, fuel and key categories. On the other hand, inflation in electricity and manufactured products led to a pick-up in wholesale inflation.
Healthy monsoon coverage, gradually increasing kharif sowing and unlocking of states are expected to reduce food intake, and thereby headline inflation, it said.
However, the risk remains on the back of correction in commodity prices and input cost pressures on the back of global demand.
As the Indian economy struggles to overcome the impact of a second wave of Covid-19, the report suggested maintaining a fast past of vaccinations and bridging gaps in the country’s healthcare infrastructure for a sustainable recovery. would be the most lasting incentive for Indian Economy.
The resilient tax collection of the central government in the first two months of the financial year 2020-21 and the sustained momentum in capital expenditure, especially in the road and rail sector, augurs well for sustained economic recovery driven by capital expenditure, it said.
The review said the recently announced economic relief package is expected to give more oil to the wheels of the capex cycle through the implementation of the PLI scheme and streamlining of procedures for PPP projects and asset monetization.
With further increase in employment support under Atma Nirbhar Bharat Rozgar Yojana (ANBY), targeted support to the urban poor through credit guarantee scheme for on-lending by micro-finance institutions, and a sense of consumption with wider Bharat-Net expected to increase. Digitization coverage.
The continuation of MGNREGA along with free food grains and increased fertilizer subsidy under the package will help meet rural demand in the coming quarters, the review said.
Source: IANS