Economy to reach pre-Covid level by fiscal-end: Govt

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November 5, 2020 3:00 AM

The report says a steady contraction of active Covid-19 cases and a low case fatality rate has “instilled measured optimism in India that the worst is behind us”.

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India’s economy stands poised to recover at a fast pace and reach pre-Covid levels by the end of this fiscal unless a second wave of cases is triggered by a fatigue with social distancing, the finance ministry said on Wednesday.

In its report for October, the department of economic affairs also said: “The continuous improvement in forward looking RBI indices of consumption and business sentiment for the next year augurs hope of a strong economic rebound.”

This is also corroborated by the International Monetary Fund’s (IMF’s) October 2020 projection of 8.8% real GDP growth for India in FY22, highest globally, it added.

For the current fiscal, however, the IMF has forecast a record 10.3% contraction for India.

The rise in high frequency indicators in October points towards “broad-based resurgence of economic activity”, the report said, citing healthy Kharif output, power consumption, rail freight, auto sales, vehicle registrations, highway toll collections, e-way bills, rebound in GST collections and record digital transactions.

“Rural consumption has stayed strong, in part helped by sustained MSP procurement of food grains by government at higher prices,” it said.

The report says a steady contraction of active Covid-19 cases and a low case fatality rate has “instilled measured optimism in India that the worst is behind us”.

At the same time, a second wave of the pandemic in advanced nations is a grim reminder of how reality hits back when caution is compromised.

The expected current account surplus during the year is likely to provide a cushion to increased spending in the economy.

Econmic affairs secretary Tarun Bajaj on Tuesday exuded confidence that the surge in a clutch of high-frequency indicators over the past two months will likely last beyond the festival season, seeking to remove doubts over its durability.

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