India will have to invest heavily in infrastructure in order to recover from the economic havoc brought on by the coronavirus pandemic, even if that means going in for deficit financing, according to a UN expert. A crisis often presents an opportunity and making the right investments can have a multiplier effect in steering the economies to a recovery, while also making a monumental difference in people s life, Hamid Rashid, the head of the UN Development Research Branch, said on Wednesday in an exclusive interview to IANS TV. We may feel a little despondent right now in terms of what is happening in India, but there s a silver lining in our view as well, he said, citing the possibilities for public sector investing in vital areas and the signs of progress in containing the pandemic.
India Was On Recovery Path Just Before Second Wave Derailed Progress India Was On Recovery Path Just Before Second Wave Derailed Progress Fresh activity curbs amid the world s worst Covid-19 outbreak in India merit a real-time reading of the economy using other indicators.
Activity in India s dominant services sector moderated in March after expanding the previous month
Economic activity in India picked up speed last month, signaling it was well on the road to recovery before a new wave of coronavirus infections derailed progress. The needle on a dial measuring so-called animal spirits moved a notch higher for the first time in six months in March, based on the three-month weighted average numbers of eight high-frequency indicators tracked by Bloomberg News.
As the country witnesses a rapid resurgence of coronavirus cases, a Finance Ministry report has exuded confidence in the Indian economy and termed the economic recovery as resilient citing improvement in high frequency indicators. The Monthly Economic Review for March 2021 released by the Department of Economic Affairs (DEA) said that the agricultural sector remains the bright spot of Indian economy with foodgrains production touching 303.3 million tonnes in 2020-21 beating record production levels for the fifth consecutive year in a row. Further, MGNREGS has acted as a strong pillar to insulate the rural economy by generating all-time high employment of 383.8 crore person days during 2020-21, 44.7 per cent higher compared to previous year.
After playing safe during the initial phase of the pandemic in 2020 and sticking to defensive plays such as pharmaceuticals, fast moving consumer goods (FMCG) and information technology (IT), investors are now betting big on cyclical recovery after a sharp economic contraction with most of the related stocks doing well at the bourses. Till June-July, defensive sectors like pharma and FMCG were leaders, followed by IT, as investors wanted to play safe given the uncertainty around the pandemic, its impact on the economy and fortunes of India Inc, analysts say. From August – September, cyclicals like auto and banking & financials picked up pace. Post budget, infrastructure, industrials, and stocks of public sector undertakings (PSUs) have rallied.
Global rating agency Standard & Poor s (S&P) said India is on track for an economic recovery in the fiscal year ending March 2022 with consistently good performance in agriculture, a flattening of the Covid-19 infection curve, and a pick-up in government spending are all supporting the economy. However, the economy still faces major risks as it transitions from stabilisation to recovery. India faces a permanent loss of output versus its pre-pandemic path, suggesting a long-term production deficit equivalent to about 10 per cent of Gross Domestic Product (GDP). India needs many things to be right for its recovery to continue. Most significantly, the country needs to quickly and thoroughly vaccinate most of its 1.4 billion people, S&P, in a report titled, Cross-Sector Outlook: India s Escape From Covid, said.