Finance Ministry is watching the festive season with cautious optimism

The Finance Ministry’s September Monthly Economic Report released on Monday said several indicators, including electricity consumption, GST receipts, rail freight activity, e-way bills and highway toll collection in August and September, are evidence of broad-based economic recovery. show. The ministry is hinged on the festive season, along with continued immunization and well-rounded policy steps such as offering incentives to new factories, to give it another booster shot to the economy.

The ministry said while automobile registrations and sales were affected by global shortage of semiconductor chips, demand is expected to pick up from the post-monsoon festive season. The steady decline in growth of currency in circulation since August is a sign of dwindling demand for precautionary savings with a gradual reopening of the economy, the report said.

The report also noted that India is on a rapid recovery path with clearly disseminated growth impulses across all sectors of the economy. The report said that sustained and strong growth in agriculture, a sharp return to manufacturing and industry, resumption of services activities and stupendous revenues indicate that the economy is making good progress. The ministry said that the strategic reforms undertaken so far along with the new milestones in the vaccination campaign have enabled the economy to navigate the devastating waves of the COVID pandemic.

The government’s optimism also rests on bank credit growth of 6.7% year-on-year in the fortnight ended September 10 FY22 as against 5.3% in the same period a year ago. “Sectorally, credit offtake by agriculture and allied activities, and micro, small and medium industries continued to perform well in August. The increase in personal loans augurs well for an improvement in consumption spending in the festive months,” the ministry said in the report.

The ministry also takes confidence from the fact that industrial output for July 2021 is close to 100% of July 2019 levels, with a recovery of 98% in manufacturing, and a full recovery or more was seen across all use-based categories, consumer durables. Excluding commodities, which recovered 91.7%. July 2019 levels. “The sharp growth in consumer durables, however, promises a rapid recovery in pre-pandemic production in the near future. The industrial recovery is expected to propel further on firming consumer demand and improving investor sentiment during the festive season.”

However, policy makers have expressed concerns about volatility in global crude oil prices and buoyancy in prices of edible oils and metal products. Also, it is too early to lower the guard as far as the Covid-cautions are concerned. While the rise in Covid positive cases seen in some states in August has been arrested and cases are declining in September, keeping the pace of vaccination, COVID-19 with proper practice as well as taking precautions Simultaneously entering the festive season in India is important. The ministry warned in the report