Indian Economic Recovery May Have Gained Momentum: FM Report

India may have crossed the peak of the Covid-19 pandemic, setting the stage for economic recovery, the finance ministry said in its monthly economic outlook report for September. The report, citing different parameters, further said that economic recovery may have gained momentum over the last few months on account of the government’s economic package as well as the unlocking of the economy. The finance ministry cited a record production of kharif foodgrains to support its case of an economic recovery being underway. It also referred to an increase in demand in the rural sector, as reflected by an increase in registration of two-wheelers, three-wheelers, and passenger vehicles, and tractor sales, in August, as compared to the year-ago period. The report also pointed out how high-frequency indicators have improved in sync with global activity. For instance, India’s exports rose more than 5 per cent in September. Many mobility and logistic indicators have also risen. Rail freight, rail passenger earnings, cargo traffic volumes and domestic aviation traffic have improved, it said. The report cautioned that a sustained spread of the virus poses a downside risk to short-term and medium-term growth rate. It, however, pointed out that the structural reforms across various sectors will “strengthen the fundamentals of the economy towards a strong and sustainable long-term growth.