Quickening pace, coverage of vaccination critical for regaining growth momentum: Finance Ministry's report

The finance ministry in its monthly economic report said that quickening the pace and coverage of vaccination of people against COVID is critical for regaining growth momentum as economic activities are inextricably linked to the path of the pandemic. It said ‘As we cautiously recuperate from the second wave, rapidly improving vaccination delivery and frontloading the fiscal measures planned in the Union Budget hold key to invigorating the investment cycle in the coming quarters’.

Regarding the impact of the second COVID wave, the report said that with state-level lockdown restrictions being more adaptive to learnings from the first wave, manufacturing and construction are expected to experience a softer economic shock in the current quarter. The report emphasised that quickening the pace and coverage of vaccination is critical to help India heal and regain the momentum of economic recovery. It said continued vigilance in terms of pandemic preparedness, upscaling health spending and health infrastructure, faster rollout of vaccines and vaccination, investing in research and development to guard against possible mutants of the virus, prudent and pre-emptive restrictions, and strict observance of COVID-appropriate behaviour are essential to maintain the delicate balance of lives and livelihoods.

The report also noted that the country witnessed a V-shaped economic recovery in the second half of 2020-21. According to the report, India is one of the select few economies that have witnessed positive YoY (Year-on-Year) growth in the last two consecutive quarters. India’s real GDP is estimated to have grown at 0.5 per cent in Q3 and 1.6 per cent in Q4 of FY 2020-21 leading to an upward revision in annual real GDP growth from (-)8 per cent (2nd Advance Estimates) to (-)7.3 per cent in FY 2020-21. With a strong policy focus on infrastructure spending and construction in the latter half of FY 2020-21, the ratio of Gross Fixed Capital Formation (GFCF) to GDP reached 34.3 per cent, among the highest in over twenty-six quarters.