Economy is picking up, says FinMin as it gives out select indicators

This comes even as the April-June quarter, and the 2020-21 fiscal year are headed for a contraction, with some estimates pegging GDP contraction for the year to be as high as 6%

The Finance Ministry on Tuesday said the economy was rebounding as India opened up after seven weeks of the lockdown, citing examples of food grain procurement, electricity and fertiliser consumption, rail freight traffic, and other indicators.

This comes even as the April-June quarter and the 2020-21 fiscal year are headed for a contraction, with some estimates pegging gross domestic product (GDP) contraction for FY21 to be as high as 6 per cent.

“Agricultural sector remains the foundation of the Indian economy. And with a forecast of a normal monsoon, it should support the rebooting of the economy. Though GDP contribution of the sector may not be very large, its growth has a very positive impact on the large population dependent on agriculture,” the ministry said in a statement.

It said wheat procurement by government agencies had touched an all-time high of 38.2 million metric tonnes on June 16, surpassing the earlier record achieved during 2012-13. “As many as 420,000 farmers have been benefitted and about Rs 73,500 crore has been paid to them towards minimum support price for wheat.” 

As of June 29, the ministry said, farmers have sown 13.1 million hectares of kharif crops, 39 per cent higher than corresponding period of last year. “Fertiliser sales have surged by almost 98 per cent year on year in May 2020, reflecting a robust agricultural sector,” it said. 

“Early green shoots of economic revival have emerged in May and June with real activity indicators like electricity and fuel consumption, inter and intrastate movement of goods, retail financial transactions witnessing pick up,” the statement said.

Citing examples, it said that in June, electricity consumption had improved from -19.8 per cent in the first week to -11.2 per cent in the second week to -6.2 per cent in third week of June, indicating lower contraction when compared to last year for each week.

Total assessable value of e-way bills picked up by a massive 130 per cent in May 2020 compared to April 2020, though lower than previous year and pre-lockdown levels, it said. 

Consumption of petroleum products, a major indicator reflecting consumption and manufacturing activity in the country, increased by 47 per cent in May. Railway freight traffic improved by 26 per cent in May over April and average daily electronic toll collection rose three times for the same comparison period, the ministry said, though it admitted all these indicators were below the same period last year.

“Total digital retail financial transactions via NPCI platforms increased sharply from Rs 6.71 trillion in April to Rs 9.65 trillion in May. The trend is expected to continue in June driven by a sustained pick-up in real activity,” it said. 

“India’s forex reserves, at $507.6 billion as of June 12, continue to provide a crucial cushion to external shocks on the back of higher FDI, portfolio flows and low oil prices. FDI in India recorded inflow of $73.45 billion in FY 2019-20, an increase of 18.5 per cent over the previous fiscal.”