The economy has started showing signs of revival from the impact of the second wave of the COVID-19 pandemic on the back of targeted fiscal relief, monetary policy and a rapid vaccination drive, the Finance Ministry said on Friday.
The broad-based economic relief package extended to mitigate the second wave amounted to Rs 6.29 lakh crore. RBI continues with its efforts to calm the nerves of the market and revive sectors with backward and forward linkages and multiplier impact on growth, the ministry said in its monthly economic review.
Measures taken by government to revival of economy
- Eight economic measures worth Rs 6.29 lakh crore
To stimulate the economy and mitigate the financial impact of the coronavirus pandemic and lockdown, Finance Minister Nirmala Sitharaman last month announced eight economic measures worth Rs 6.29 lakh crore to provide relief to individuals as well as businesses in the country.
- Stimulus package for Tourism Industry
Apart from the eight relief measures announced in the health and other badly affected sectors, Nirmala Sitharaman also announced a stimulus package for the tourism industry, which included five lakh tourist visas to be issued free of cost, once the government resumes issuance. The total financial implication of the scheme will be Rs 100 crore.
- Capital expenditure
The central government’s resilient tax collection in the first two months of the financial year 2020-21 and sustained momentum in capital expenditure, especially in the road and rail sector, augurs well for continued economic recovery driven by capital expenditure, the report said.
The report further said that the recently announced economic relief package was “expected to give more oil to the wheels of the Capex cycle through the implementation of the PLI scheme and streamlining of processes for PPP projects and Asset Monetisation”.
- Atmanirbhar Bharat Rojgar Yojana
Consumption sentiment is expected to pick up with the further increase in employment support under the Atmanirbhar Bharat Rojgar Yojana (ANBY), targeted support to the urban poor through credit guarantee schemes for on-lending by micro-finance institutions and comprehensive Bharat-Net digitization coverage, according to the June economic review stated.
Free food grains and increased fertilizer subsidy under the package, along with the continued implementation of MGNREGA, will also serve as a cushion for rural demand in the coming quarters.
- Rapid Vaccination & development of Health-care infrastructure
Keeping up the pace on vaccination and rapidly bridging the health care infrastructure gap in both urban and rural areas will emerge as the most lasting stimulus for the sustainable recovery of the Indian economy,” the report added.
Going forward, it said, further expansion of vaccination and strict adherence to COVID-appropriate behaviour would be an important safeguard against the emergence of a possible third wave.
- Healthy monsoon coverage
On high food prices, the report said, healthy monsoon coverage, gradually increasing Kharif sowing and unlocking states are expected to reduce food, and thereby headline inflation.
However, it said, risks remain on the back of correction in commodity prices on account of global demand and input cost pressures.
- Increase in Exports
The decline in COVID-19 infections and a spurt in vaccinations consolidated US recovery and renewed growth prospects in the euro area. Global trade remained buoyant with an uptick in global commercial flight and port activity, which portends well for Indian exports.