INSUBCONTINENT EXCLUSIVE:
Global demand-led recovery in commodity prices and input cost pressures pose a riskIndian economy is showing signs of revival from the
second wave of the COVID-19 pandemic with targeted fiscal relief, monetary policy, and a rapid vaccination drive, said Finance Ministry in
its monthly economic review for June 2021
However, the economic recovery remains uneven as indicators such as port traffic, air traffic, purchasing manager's index (PMI), and
services show a lagged revival from the impact of the second wave.The manufacturing sector declined last month for the first time in 11
months, due to the impact of the second wave and lockdown restrictions announced by several states
The IHS Markit India manufacturing PMI which is adjusted seasonally, recorded 48.1 in June, compared to 50.8 in May 2021.Similarly, the
activity in the country's services sector contracted sharply in June as strict restrictions on mobility to arrest the spread of the COVID
cases affected demand and resulted in job losses across sectors
The IHS Markit's Services PMI declined to 41.2 in June 2021 from an already depressed 46.4 in May, which was its lowest reading since July
2020, and well below the 50-level separating growth from contraction.The country's domestic traffic was 71 per cent lower in May 2021,
compared to the corresponding period in 2019 amid the emergence of the Delta variant of COVID-19, according to global airlines body
International Air Transport Association (IATA).The latest industrial production estimates register a sequential moderation in the growth of
the eight core industries at 16.8 per cent year-on-year in May 2021, eight per cent lower than pre-COVID level in May 2019.The healthy
monsoon coverage, gradually rising kharif sowing and unlocking of states is expected to ease food, and headline inflation
However, risks due to global demand-led recovery in commodity prices and input cost pressures remain, according to the finance ministry's
report.The government assured that free food-grain and enhanced fertilizer subsidies under the economic relief package along with continued
MGNREGA implementation would serve as a cushion for the rural demand in the coming quarters.The country's average daily vaccination rate in
June doubled to 41.3 lakh doses, compared to 19.3 lakh in May 2021, crossing the 36 crore mark in its cumulative vaccination coverage, said
the finance ministry in its monthly economic review.The country has crossed the 35 crore mark in its cumulative COVID vaccination coverage
with 21 per cent of the population covered under the first dose and 4.6 per cent of the population fully vaccinated
Further expansion of the vaccination drive and strict adherence to COVID-appropriate behaviour will be crucial to safeguard against the
emergence of a possible third wave, the report added.Last month, Finance Minister Nirmala Sitharaman announced eight economic measures to
ease the financial impact of the second wave of the pandemic and to provide relief to the stressed sectors of the economy, with a special
focus on health and tourism.The measures included a loan guarantee scheme of Rs 1.1 lakh crore, out of which Rs 50,000 crore is earmarked
for the health sector to scale up medical infrastructure
Ms Sitharaman also announced a stimulus package for the battered tourism sector, which included five lakh tourist visas to be issued free of
charge, once the government resumes issuance.
