The finance ministry on Tuesday cited "green shoots" of recovery in agriculture, manufacturing and services sectors, and said the prompt policy measures taken by the government and RBI have helped reinvigorate the economy with minimal damage.
Illustration: Dominic Xavier/Rediff.com.
Stating that the agricultural sector remains the foundation of the Indian economy, the ministry said that a normal monsoon, as has been forecast, should support the rebooting of economy.
"Though the GDP contribution of the sector may not be very large (in relation to industry and services), its growth has a very positive impact on the large population dependent on agriculture.
“Further, the recent landmark reforms announced in the sector will go a long way in building efficient value chains and ensuring better returns for farmers," the ministry said in a statement.
Early green shoots of economic revival have also emerged in May and June with real activity indicators like electricity and fuel consumption, inter and intra-state movement of goods, retail financial transactions witnessing pick up, it said, adding India becoming the world's second largest manufacturer of personal protective equipment (PPE) within two months shows the resilience of the manufacturing sector.
"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.... The commitment of the government towards both structural reforms and supportive social welfare measures will help build on these 'green shoots'," the ministry said.
To contain the spread of coronavirus the government had imposed nationwide lockdown from March 25. From June 1, India has started phased resumption of services and businesses.
Due to timely tracing, treatment and reporting, the number of people recovering from the virus is continuously rising and the active cases, as on date, are 41 per cent of the total cases in the country.
"The resolve for 'Atma Nirbhar Bharat' will be strengthened with the collective effort of all stakeholders and contribute to rebuilding a strong vibrant Indian economy," it said.
With regard to agriculture sector, the ministry said procurement of wheat from farmers by government agencies has touched an all-time record figure of 382 lakh metric tonne (LMT) on June 16, 2020, surpassing the earlier record of 381.48 LMT achieved during 2012-13. 42 lakh farmers have been benefitted and a total amount of about Rs 73,500 crore has been paid to them towards minimum support price (MSP) for wheat, it said.
As on June 19, farmers have sown 13.13 million hectares of kharif crops, 39 per cent higher than corresponding period of last year with a big jump in area coverage under oil seeds, course cereals, pulses and cotton.
Fertiliser sales have surged by almost 98 per cent year-on-year in May 2020 to 40.02 lakh tonne, reflecting a robust agricultural sector.
Giving data on manufacturing sector, the ministry said India's 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 per cent in April to (-) 15.2 per cent in May to (-) 12.5 per cent in June (till June 21). In June, electricity consumption has continuously improved from (-) 19.8 per cent in the first week to (-) 11.2 per cent in the second week to (-) 6.2 per cent in the third week.
Total assessable value of e-way bills picked up by a massive 130 per cent in May 2020 (Rs 8.98 lakh crore) compared to April 2020 (Rs 3.9 lakh crore), though lower than previous year and pre-lockdown levels. Value of e-way bills generated between June 1-19 stood at Rs 7.7 lakh crore.
Consumption of petroleum products, a major indicator reflecting consumption and manufacturing activity in the country, increased by 47 per cent from 99,37,000 metric tonnes in April to 1,46,46,000 metric tonnes in May.
Consequently, year-on-year contraction in consumption growth of petroleum products was much smaller at (-)23.2 per cent in May against (-)45.7 per cent in April. In June, growth in consumption of petroleum products is expected to be still higher, the ministry said.
In the services sector, railway freight traffic improved by 26 per cent in May (8.26 crore tonne) over April (6.54 crore tonne). The improvement is likely to continue in June in sync with 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 four 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 said.
It said with RBI's efforts towards ensuring adequate liquidity, private placement of corporate bonds picked up sharply by 94.1 per cent in May (Rs 0.84 lakh crore) as compared to a contraction of 22 per cent in April (Rs 0.54 lakh crore). June is likely to see a still larger placement as excess liquidity persists in the system.
Also, the average assets under management (AUM) of mutual funds increased by 3.2 per cent to Rs 24.2 lakh crore in May 2020 from Rs 23.5 lakh crore in April 2020.
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 FDI, portfolio flows and low oil prices.
FDI in India recorded inflow of USD 73.45 billion in FY 2019-20, an increase of 18.5 per cent over the previous fiscal.
Global rating agencies like S&P and Fitch has projected Indian economy to shrink by five per cent in the current fiscal, while Moody's pegged the contraction at 4 per cent.