Finance Ministry’s Economic Report for May: ‘Recovery moderated by 2nd Covid wave hitting rural areas’

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published Published on Jun 10, 2021   modified Modified on Jun 10, 2021

-The Indian Express

The report stressed that an accelerated vaccination drive is imperative to avoid or lower the ferocity of subsequent waves.

Rapid vaccination and front-loading of the fiscal measures planned in the Union Budget are key to invigorating the investment and consumption cycle in the coming quarters, the Finance Ministry said on Wednesday in its Monthly Economic Report for May. It said the momentum of economic recovery seen last fiscal year has been “moderated by the ravaging second wave of Covid-19” that also entered rural India.

The report stressed that an accelerated vaccination drive is imperative to avoid or lower the ferocity of subsequent waves.

“As we cautiously recuperate from the second wave, rapid vaccination and frontloading of the fiscal measures planned in the Union Budget hold key to invigorating the investment, and thereby consumption, cycle in the coming quarters. As seen in Q4FY2020-21, where growth in capex generated positive spillovers for consumption, including in the contact-sensitive sectors, these steps would facilitate recovery post the second wave,” the Ministry said.

Before the second wave of the Covid-19 hit the country, India’s gross domestic product (GDP) grew 1.6 per cent in the fourth quarter (January-March) of 2020-21. For the full financial year 2020-21, however, the GDP contracted 7.3 per cent — a record low.

Quickening the pace and coverage of vaccination is critical to help India heal and regain the momentum of economic recovery, it noted.

“This momentum of economic recovery has, however, been moderated by the ravaging second wave of Covid. Unlike the first wave, the effect of the second wave has been asynchronous in its onset across states and wider in its spread as the second wave also entered the rural hinterland. This necessitated a differentiated, state-level policy response in close coordination with the Central Government for rapid rebooting of health infrastructure,” it said.

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The Indian Express, 10 June, 2021, https://indianexpress.com/article/business/economy/finance-ministrys-economic-report-for-may-recovery-moderated-by-2nd-covid-wave-hitting-rural-areas-7351790/


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