oppn parties The Economy: Out Of Technical Recession

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  • 21 killed in a hooch tragedy in Amritsar. Police arrested 10 persons
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  • Centre tells the Supreme Court that since women are not in combat roles, there has to be a separate selection board for them
  • India briefs 70 nations on Operation Sindoor
  • PM Modi asks Pakistan to vacate illegally-occupied portions of Kashmir
  • PM Modi tells Pakistan that it faces annihilation if it does not stop supporting terror
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  • Retail inflation dipped to 3.2% in April, the lowest since July 2019
  • Stocks tumble on Tuesday: After the all-time single-day gain on Monday, stocks lost heavily on Tuesday - Sensex went down by 1281 points to 81148 and Nifty lost 346 points to 24578
  • Indian tour to England: A new look Indian team with a new skipper will be announced when the selectors meet later this week in view of the retirement of Virat Kohli, Rohit Sharma and R Ashwin
  • IPL: Most overseas players to return and teams likely to be full strength
  • Sharad Pawar calls for an all-party meet to discuss Operation Sindoor, says such matter cannot be publicly discussed in Parliament as the Congress had earlier demanded
PM Modi warns Pakistan - stop supporting terror or face annihilation /////// Also asks Pakistan to vacate illegally-occupied portion of Kashmir
oppn parties
The Economy: Out Of Technical Recession

By Ashwini Agarwal
First publised on 2021-02-27 02:34:56

The Indian economy is out of technical recession. It has posted a small growth of 0.4% (3.3% last year in the same period) in the December quarter as per the data released by the NSO. The government says that this small growth shows the strengthening of the V-shaped recovery. Yet, the finance ministry has revised its estimates for the full year. The economy is now likely to contract by 8 percent in FY2020-21 against the earlier estimate of 7.7%.

In the December quarter, the farm sector grew by 3.9 percent; manufacturing by 1.6 percent; construction by 6.2 percent and electricity, gas, water and other utility services grew by 7.3 percent. Trade and hotel services went down by 7.7 percent.

The per capita income in real terms at 2011-12 prices was Rs 85929 (Rs 94566 last year) and was down by 9.1 percent. At current prices, it stood at Rs 127768 (Rs 134186 last year) and this was down by 4.8 percent.

These figures show that although the economy is recovering, the pace is slow and it will take time to return to pre-pandemic levels. The opening of many sectors has worked in the favour of the economy but the looming danger of a resurge in infections, despite vaccination, might play spoilsport. Restrictions are already being imposed in hotspots, especially in Maharashtra, and if the spread is not contained, limited lockdowns can make a comeback. Further, if fuel prices are not contained (with no likelihood of world crude prices easing in the near term), there will be an uptick in inflation and that is likely to suppress demand further.

The government needs to support the economy by making quick and heavy investments in infrastructure. Although the Budget had laid out a roadmap, if sell-off of PSUs and banks do not happen fast and if GST collections do not maintain the recent good showing, the government will be strapped for funds. The virus has also got to be contained and this time, closing down industry or business establishments should be the last option. We need to vaccinate a critical mass at the earliest and the decision to involve the private sector from March 1 and make the vaccination drive a walk-in affair for certain age groups is welcome. If the virus doesn’t change the equation and if the government finds the money to invest, one feels that the economy will rebound strongly from the first quarter of FY 2021-22.