With the country in the throes of a rapid resurgence in coronavirus cases, a Finance Ministry report has exuded confidence in the Indian economy and termed the economic recovery as resilient citing improvement in high frequency indicators. The Monthly Economic Review for March 2021 released by the Department of Economic Affairs (DEA) said that the agricultural sector remains the bright spot of Indian economy with foodgrains production touching 303.3 million tonnes in 2020-21 beating record production levels for the fifth consecutive year in a row.
Further, MGNREGS has acted as a strong pillar to insulate the rural economy by generating all-time high employment of 383.8 crore person days during 2020-21, 44.7 per cent higher compared to previous year. "Despite the surge in cases, the recovery in economy is resilient with sustained improvement in the majority of high frequency indicators," it said.
The report noted that India's PMI Manufacturing Index of 55.4 in March indicated some loss of momentum compared to February. However, manufacturing sector conditions continue to improve sharply, outpacing the long-run series average with firms scaling up production and witnessing upturn in sales.
Further, strengthening in demand conditions could be clearly seen in auto sales and power consumption. Monthly GST collections attained all-time record levels in March, since its inception.
The report highlighted the second wave of COVID-19 infection in India with the rise in daily new cases since middle of February. The department, however, is of the view that India has been able to delay the onset of the second wave as the gap between the first peak to start of second wave has been 151 days in India while it was much lower in other countries.
"At this juncture of onset of the second wave, India is well prepared to combat the scourge of the virus. It is well-equipped with adequate testing and health infrastructure and economic activity has adapted to the pandemic."
Concerns, however, have been growing with the surging number of cases. India registered over 1.03 lakh new coronavirus cases in the last 24 hours, the highest ever single-day spike since the onset of the pandemic last year, taking the total tally to 1,25,89,067 on Monday.
Fears of local restrictions and lockdowns too have grown which may impact business and economic activities. Maharashtra, already has announced night curfew and weekend lockdown.