India poised to recover at fast pace: Finance Ministry

Indian ecomy is poised to recover at a fast pace and reach pre-COVID-19 levels by end of year, finance ministry said in its monthly report but also cautioned about possibility of "fatigue with social distancing rms" triggering a second wave of coronavirus infections.

sustained surge of activity levels in India, itself, is a reflection of a relatively more manable pandemic situation in country as compared to vanced nations, report for October said.

"A stey contraction of active COVID-19 cases and a low case fatality rate has instilled measured optimism in India that worst is behind us. At same time, a second wave of pandemic in vanced nations is a grim reminder of how reality hits back when caution is compromised.

"From a trickle in t so distant past to w a sea of humanity coming out on streets, people of India have embraced new rmal where self-protection is inseparable from ecomic activity," it ded.

report, released on Wednesday, furr stressed that India stands poised to recover at a fast pace and reach pre-COVID levels by end of year -- barring incidence of a second wave that may be triggered by fatigue with social distancing.

continuous improvement in forward-looking RBI indices of consumption and business sentiment for next year augur hope of a strong ecomic rebound.

This is also corroborated by IMF's October 2020 projection of 8.8 per cent real GDP growth of India in FY 2021-22, highest globally, it said.

Pointing to movement of high frequency indicators, report said October numbers clearly indicate bro-based resurgence of ecomic activity, tably in 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 (Minimum Support Price) procurement of food grains by government at higher prices, it said.

Manufacturing Purchasing Manrs' Index rose from 56.8 in September to 58.9 in October, pointing to strongest improvement in health of sector in over a dece. Also, PMI Services index rose to 54.1 in October, ending seven-month sequence of contraction, signalling improved market conditions, it ded.

With onset of festive season, overall consumption is expected to see furr uptick in coming months enhancing prospects of faster ecomic rmalisation, according to report.

Furr, report said prospect of ecomic rmalisation is also evident in external sector indicators with consumption of petroleum products increasing in September and exports rebounding strongly with a year-on-year positive growth for first time in last seven months.

October witnessed some moderation in exports growth, primarily driven by weak oil exports. expected current account surplus during year is likely to provide a cushion to increased spending in ecomy, it said.

Global investors continue to be upbeat about India's ecomic prospects as gross FDI inflows cross USD 35 billion during April-August, 2020, highest ever for first five months of a financial year. With net FPI inflows staying robust in October, INR stood strong at about 73 to a USD on back of forex reserves w comfortably settled in excess of half a trillion dollars, report said.

On high food inflation, report said that food prices have been under pressure but are likely to smoon out with prospects of a good kharif harvest and reduced supply-side disruptions in inter-state movement of food products.

"A slight hardening of core WPI inflation in September is reflective of strengning demand that appears to have caused a marginal uptick in growth of bank credit as well in fortnight ending October 9," it said.

(Photo Credit: PTI)