India’s beleaguered economy, led by the rural sector, is seeing green shoots recovery after easing of the covid-induced nationwide lockdown, according to the Confederation of Indian Industry (CII).
Unlike previous years when recessions were triggered by the failure of monsoon, the current year stands in complete contrast when the June-September seasonal rainfall is expected to be bountiful.
“This year, the agricultural sector has emerged as the beacon of hope for India’s economy. Apart from normal monsoon and healthy sowing, a slew of government schemes in the form of livelihood interventions, such as expanding the MNREGA program and the Pradhan Mantri Garib Kalyan Rozgar Abhiyan, have supported the rural economy considerably,” said Chandrajit Banerji, CII’s director general.
“This has raised hopes of a rebooting of the economy by the rural sector,” he added.
A clutch of indicators including Goods and Services Tax collections, railway freight traffic, petrol consumption, peak power demand, electronic toll collections among others all mirror incipient signs of recovery, the CII said.
Direct interventions by central and state governments to ensure that the lockdowns do not affect the rabi (winter crop) harvest in March and April and the sowing of kharif (summer) crop in June, has led to expectations of a bumper agriculture production, the report added.
Consequently, Non-Banking Financial Companies sector lending in rural areas has also been as high as 80% of the usual levels.
Government plays key role
On its part, the government has played a big role in driving the nascent recovery process by providing direct cash and food transfers to the rural and urban poor.
Under the PM Garib Kalyan Ann Yojana ( PM Grain Distribution Program for the Poor), free distribution of 5 kilogram of food grains and 1 kilogram of pulses per household was announced in March, which has recently been extended to six months till November from three months.
Further, the limit of 5 kilogram of grains per person has been raised to 7 kilograms per person per month until November.
Other marquee schemes announced as a part of the Atmanirbhar stimulus package have also taken off well, including a Rs 3 lakh crore collateral free loan for medium, small and micro enterprises and a Rs 30,000 crore special liquidity scheme for NBFCs, Housing Finance Corporation and Mutual Funds, Banerjee added.
“In a significant confidence building measure, it is encouraging to note that the government dues to the industry have started coming in, which are likely to serve as a big and a direct liquidity booster to industry,” he said.
There are significant variations in the performance of different sectors apart from rural sectors.
“Consumer facing industries, such as staple-based FMCG (Fast Moving Consumer Goods), are likely to grow at 15-20 % in FY 21, primarily on account of an increase in in-house consumption of food and greater demand for sanitation and hygiene products,” Banerjee said.
In contrast, sectors such as aviation, hotels and commercial vehicles are still very stressed, he added.