Confederation of Indian Industry (CII) President Uday Kotak on Wednesday termed the recent high frequency data as “promising signs” of recovery in various sectors and hoped these, coupled with reforms in areas like labour and agriculture, will lead to a faster-than-expected rebound in economic activities.
“Though still early, these are indeed promising signs, pointing towards some semblance of a recovery taking shape in various sectors. We expect economic activity to continue to normalise in the coming months,” said Kotak.
Specifically, resilience in the rural economy, helped by a buoyant monsoon and government spending, and an accommodative monetary policy environment is expected to spur economic activity, he said.
However, he cautioned, “Our expectation hinges on the fact that there will be no second wave of the pandemic in the ensuing months”.
In what was seen as a departure from the despondent mood earlier, industry now sees sectors witnessing better pick-up and capacity utilisation than what was projected in March. While the pick-up in the first few weeks after the lockdown was attributed to pent-up demand, its sustenance, particularly in some non-essential sectors, has raised hopes.
“The determination by the government to meet the challenges by pushing through some long-pending reforms like the labour reforms and those for the farm sector, apart from the call for an Atmanirbhar Bharat, have helped improve the confidence of the industry,” he said. Kotak referred to indicators such as goods and services tax (GST) collections, e-way bills, exports, purchasing managers’ index, consumption of petroleum products, and power.
With the easing of restrictions from June, most high frequency data points have shown normalisation, compared to the multi-year lows seen in April, he said.
On the farm sector, the CII president said, “This year, the agriculture sector has emerged as a beacon of hope for India’s economy, with a normal and largely well-distributed monsoon and record foodgrain production cushioning the rebooting of the economy. A concerted action plan from the government to support the rural sector in the form of agri-infrastructure fund and other key reforms in the sector has also supported the sector”.