India’s economy showing revival signs on targeted fiscal relief, vaccination drive, says Union minister Pankaj Chaudhary

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Indian economy is showing signs of revival since the peaking of second COVID wave in the first half of May on the back of targeted fiscal relief, strong push for capital expenditure, and a rapid vaccination drive, Union minister Pankaj Chaudhary said on Monday.

India’s real Gross Domestic Product (GDP) is estimated to grow 0.5 per cent in Q3 and 1.6 per cent in Q4 of 2020-21, leading to an upward revision in annual real GDP growth from (-)8.0 per cent (2nd advance estimates) to (-)7.3 per cent. he said.

The Minister of State for Finance noted that the momentum of economic recovery was, however, moderated by the onset of the second wave of COVID, he said.

“The Indian economy is showing signs of revival since the peaking of second wave in first half of May 2021 on the back of targeted fiscal relief, strong push for capital expenditure, RBI’s monetary policy measures, and a rapid vaccination drive.

“This is reflected in movement of several high frequency indicators like E-way bills, power consumption, rail freight, UPI transactions, vehicle registrations, etc,” he said in a written reply to Lok Sabha.

According to him, the government has formulated a multi-pronged strategy to ensure that the prices of essential commodities like pulses and oil seeds remain controlled. The strategy includes issuance of order imposing stock limits on pulses applicable to wholesalers, retailers, millers and importers with effect from July 2 and increasing the number of price monitoring centres under Price Monitoring Scheme.

Citing RBI’s Monetary Policy Committee’s (MPC) resolution on June 4, the minister said the rising trajectory of international commodity prices, especially of crude, together with logistics costs, pose upside risks to the inflation outlook.

However, Chaudhary said these cost pressures are expected to be mitigated by a normal south-west monsoon, comfortable buffer stocks, recent supply side interventions in pulses market, declining caseload of COVID and gradual easing of movement restriction across states.

“Taking into consideration all these factors, the MPC has projected CPI inflation at 5.1 per cent during FY 2021-22 with risks broadly balanced. The MPC continuously reviews the inflation outlook in its bi-monthly meetings,” he said.

Replying to another question, Chaudhary said the recent increase in retail inflation is mainly on account of increase in inflation in food commodities.

The government has taken many steps to arrest the rise in retail inflation in food items. It has eased the import restrictions to enhance domestic availability of pulses Tur, Urad and Moong and also entered into MoUs with Myanmar, Malavi, Mozambique for import of pulses, he said.

“The dynamic buffer stock of pulses have been used to tackle price volatility of these commodities. Stock limits were imposed for all pulses except Moong from July 2 to October 31, 2021. Duty of crude palm oil and refined palm oil have been reduced,” he added.