Two weeks into the first phase of ‘Unlock-1’, the Finance Ministry has cited several indicators ranging from wheat procurement, rise in railway freight to lower contraction in manufacturing PMI and power consumption to show an increase in economic activities.
In a statement, the Finance Ministry on Tuesday noted that agriculture remains the foundation of the Indian economy and with a forecast of a normal monsoon, should support the economy’s rebooting.
“Though the GDP contribution of the sector may not be very large (in relation to industry and services), its growth has a very positive impact on the large population dependent on agriculture,” it said.
Further, the recent landmark reforms announced in the sector will go a long way in building efficient value chains and ensuring better returns for farmers.
Outlining the developments which suggest an increase in economic activity, the official statement said that the procurement of wheat from farmers by government agencies has touched an all-time record figure of382 lakh metric tonne on June 16, 2020 surpassing the earlier record of 381.48 lakh metric tonne achieved in 2012-13.
It said that this landmark has been accomplished during the trying times of the pandemic under the social distancing restrictions.
Around 42 lakh farmers have been benefited and a total amount of about Rs. 73,500 crore has been paid to them towards Minimum Support Price (MSP) for wheat.
Further, the procurement of Minor Forest Produces (MFP) under the MSP for MFP Scheme in 16 states has hit a record-breaking high with the procurement touching Rs 79.42 crores.
“This has proved to be a much needed panacea in these distressing times of Covid-19 pandemic, which has disrupted lives and livelihoods of tribals,” it said.
As on June 19, farmers have sown 13.13 million hectares of Kharif crops, 39 per cent higher than corresponding period of last year with a big jump in area coverage under oil seeds, course cereals, pulses and cotton.
Fertiliser sales have also surged by almost 98 per cent year-on-year in May 2020 to 40.02 lakh tonne, reflecting a robust agricultural sector.
The Finance Ministry also cited the lower contraction of the PMI for manufacturing and services to show a rise in economic activities.
India’s PMI Manufacturing and Services showed lower contraction in May at 30.8 and 12.6 respectively over April, it said.
Electricity consumption saw lower contraction in growth rates from (-) 24 per cent in April to (-) 15.2 per cent in May to (-)12.5 per cent in June so far, it said.
Further, the total assessable value of E-Way bills picked up by a massive 130 per cent in May 2020 to Rs 8.98 lakh crore compared to Rs 3.9 lakh crore in April 2020, though lower than previous year and pre-lockdown levels.
Value of E-Way bills generated during June 1-19 stood at Rs 7.7 lakh crore, with 11 days left for the month to complete, the ministry said.
Consumption of petroleum products, a major indicator reflecting consumption and manufacturing activity in the country, increased by 47 per cent from 99,37,000 metric tonne in April to 1,46,46,000 metric tonnes in May.
Consequently, year-on-year contraction in consumption growth of petroleum products was much smaller at (-)23.2 per cent in May against (-)45.7 per cent in April, it said, adding that in June, growth in consumption of petroleum products is expected to be still higher after one month of Unlock 1.0.
It also said that railway freight traffic improved by 26 per cent in May over April, though still lower than previous year levels. The improvement is likely to continue in June in sync with growth in movement of goods on National Highways, according to the government.
Average daily electronic toll collections increased from Rs 8.25 crore in April, 2020 to Rs 36.84 crore in May, rising more than four times. In the first three weeks of June, it has improved further to Rs 49.8 crore, showed the ministry data.
It further noted that with RBI’s efforts towards ensuring adequate liquidity, private placement of corporate bonds picked up sharply by 94.1 per cent YoY in May as compared to a contraction of 22 per cent in April. June is likely to see a still larger placement as excess liquidity persists in the system, it said.
India’s forex reserves at $507.6 billion as on 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.
In a tweet, the ministry said: “As India Unlocks, Economic Indicators improve prompt policy measures by @RBI & Govt spawn green shoots in economy Structural reforms & welfare measures will help build on these & lead us towards #AatmaNirbharBharat & a strong vibrant economy.”
The Finance Ministry statement further said that the commitment of the government towards both structural reforms and supportive social welfare measures will help build on these ‘green shoots’.
“The resolve for ‘Atmanirbhar Bharat’ will be strengthened with the collective effort of all stakeholders and contribute to rebuilding a strong vibrant Indian economy,” it said.
The statement comes at a time when serious concerns have been raised over the growth rate of the Indian economy. Several global banks and rating agencies, along with the Reserve Bank of India have projected a contraction in India’s GDP this fiscal.