Representational image of Union finance ministry | ANI
Representational image of Union Finance Ministry | ANI
Text Size:

New Delhi: A sharp increase in kharif sowing, pick-up in electricity consumption, and higher freight movement by road and railways are indicative of emergence of green shoots in the economy, the finance ministry’s monthly economic outlook report for the month of June said. 

It also cited higher retail financial transactions, pick-up in consumption of petroleum products and improvement in purchasing managers index to state that the economy is showing signs of early recovery. 

However, it flagged that the pandemic is likely to affect business climate and push firms to delay their investment plans. 

“These green shoots have a conducive policy environment to grow further and nudge the economy early on the path of economic recovery and growth,” said the report. 

“With huge uncertainty around the pandemic stemming from the unknown, and the inability to plan for or know what’s next, such uncertainty is expected to adversely affect business climate and make firms delay their investment plans,” it said.

Data from CMIE (Centre for Monitoring Indian Economy) shows that fresh capex investments have crashed in the April to June quarter. 

Only Rs 0.56 lakh crore of fresh investments towards capital expenditure were made in the quarter ended June, as against Rs 3.37 lakh crore in the quarter ended March and Rs 5.15 lakh crore in the quarter ended December.  

We are deeply grateful to our readers & viewers for their time, trust and subscriptions.

Quality journalism is expensive and needs readers to pay for it. Your support will define our work and ThePrint’s future.

SUBSCRIBE NOW


Also read: Covid shows India needs economic model focused on people at bottom of pyramid, report says


The green shoots 

In its report, the finance ministry cited the lower contraction in electricity consumption in June and improvement in petroleum products consumption. 

Electricity consumption contracted by 11.3 per cent year on year in June, as against 24 per cent in April and 15 per cent in May. Year on year contraction in consumption of petroleum products also moderated in May compared to April. 

Freight movement by road also showed improvement if one goes by e-way bills and electronic toll collection data. E-way bills have been growing month on month, with the value of e-way bills generated in June registering a growth of 30 per cent over May.

Electronic toll collection also increased to Rs 51 crore in June, from Rs 37 crore in May. Railway freight data is also picking up, the finance ministry said. 

On the agriculture front, the report pointed out sowing for kharif is up by 104 per cent and rabi procurement is on track for oilseeds, pulses and wheat due to the bumper harvest. 

Despite the early recovery signs, many economists project India to contract in the range of 5-12 per cent in 2020-21. 

On inflation

The report said inflation is expected to remain benign despite an increase in fuel prices. 

“Petrol and diesel rates have also witnessed consecutive rises across metro cities in June, driven by base price hikes by oil companies and excise duties raised by governments. While there has been a moderate recovery in fuel prices, the overall inflation outlook continues to remain benign notwithstanding the supply shocks acting on food inflation,” the report added. 


Also read: India’s 50-day lockdown has brought economic misery even as Covid cases surge


 

Subscribe to our channels on YouTube & Telegram

News media is in a crisis & only you can fix it

You are reading this because you value good, intelligent and objective journalism. We thank you for your time and your trust.

You also know that the news media is facing an unprecedented crisis. It is likely that you are also hearing of the brutal layoffs and pay-cuts hitting the industry. There are many reasons why the media’s economics is broken. But a big one is that good people are not yet paying enough for good journalism.

We have a newsroom filled with talented young reporters. We also have the country’s most robust editing and fact-checking team, finest news photographers and video professionals. We are building India’s most ambitious and energetic news platform. And we aren’t even three yet.

At ThePrint, we invest in quality journalists. We pay them fairly and on time even in this difficult period. As you may have noticed, we do not flinch from spending whatever it takes to make sure our reporters reach where the story is. Our stellar coronavirus coverage is a good example. You can check some of it here.

This comes with a sizable cost. For us to continue bringing quality journalism, we need readers like you to pay for it. Because the advertising market is broken too.

If you think we deserve your support, do join us in this endeavour to strengthen fair, free, courageous, and questioning journalism, please click on the link below. Your support will define our journalism, and ThePrint’s future. It will take just a few seconds of your time.

Support Our Journalism

Share Your Views

LEAVE A REPLY

Please enter your comment!
Please enter your name here