The Ministry of Finance has said that Indian economy is on the path of recovery from covid-19 pandemic. In a press release, the ministry said that improvement in monetary indicators like RBI’s measure to ensure adequate liquidity, growth in MF’s AUM and increase in forex reserve indicate that India is on the recovery path.
The ministry said that the government and the RBI have taken prompt policy measures - both short term and long term in a calibrated manner to reinvigorate the economy at the earliest with minimal damage.
Let’s look at some of them.
Monetary indicators
- With RBI’s efforts towards ensuring adequate liquidity, private placement of corporate bonds picked up sharply by 94.1% (YoY growth) in May (Rs. 0.84 lakh crore) as compared to a contraction of 22% in April (Rs. 0.54 lakh crore)
- Average AUM of mutual funds increased by 3.2% to Rs.24.2 lakh crore in May 2020 from Rs. 23.5 lakh crore in April 2020. Contraction in YoY growth in the indicator also fell from -6.9% in April to -4.5% in May
- India’s forex reserves at USD 507.6 billion as on June 12, continue to provide a crucial cushion to external shocks on the back of higher foreign direct investment, portfolio flows and low oil prices
Manufacturing
- India’s purchasing managers’ index (PMI) manufacturing and services showed lower contraction in May at 30.8 and 12.6 respectively over April (27.4 and 5.4 respectively)
- Electricity consumption saw lower contraction in growth rates from -24% in April to -15.2 % in May to -12.5 % till June 21
- Consumption of petroleum products, a major indicator reflecting consumption and manufacturing activity in the country increased by 47% from 99,37,000 metric tonnes in April to 1,46,46,000 metric tonnes in May
Services
- Railway freight traffic improved by 26 % in May (8.26 crore tonnes) over April (6.54 crore tonnes), though still lower than previous year levels. The improvement is likely to continue in June in sync with the growth in movement of goods on National Highways
- Average daily electronic toll collections increased from Rs. 8.25 crore in April, 2020 to Rs. 36.84 crore in May, rising more than 4 times. In the first three weeks of June, it has improved further to Rs. 49.8 crore
- Total digital retail financial transactions via NPCI platforms increased sharply from Rs. 6.71 lakh crore in April, 2020 to Rs. 9.65 lakh crore in May. The trend is expected to continue in June driven by a sustained pick-up in real activity
The Ministry further said that the commitment of the government towards both structural reforms and supportive social welfare measures will help build on these ‘green shoots’. The resolve for ‘Atmanirbhar Bharat’ will be strengthened with the collective effort of all stakeholders and contribute to rebuilding a strong vibrant Indian economy, said the Ministry of Finance.
