Worst appears to be over, farm sector to cushion COVID-19 affect on financial system: Finance Ministry report


New Delhi, August 4

The worst appears to be over and the agriculture sector will present a cushion for the coronavirus-hit financial system this fiscal as there are prospects of excellent monsoon, Finance Ministry stated in a report on Tuesday.

“India is well on the path of recovery from a trough in April, ably supported by proactive Government and Central Bank policies,” the Macroeconomic Report for July, launched by the Economic Affairs Department stated.

“With India unlocking, the worst seems to be over for the economy as high-frequency indicators recovered in June 2020 from unprecedented troughs in April; however, risks on account of rising COVID-19 cases and intermittent state lockdowns remain,” it stated.

It additional famous that the rise in COVID-19 circumstances and subsequent intermittent lockdowns make the restoration prospects fragile and referred to as for fixed and dynamic monitoring.

Pinning hopes on the farm sector, the report stated, agriculture is ready to cushion the shock of the COVID pandemic on the Indian financial system in 2020-21.

“With the forecast of a normal monsoon at 102 per cent of the long-period average (LPA), agriculture, which contributes about 15 per cent of total gross value added, is set to cushion the shock of COVID pandemic on the Indian economy in 2020-21,” it stated.

Timely and proactive exemptions from COVID-induced lockdowns to the sector facilitated uninterrupted harvesting of rabi crops and enhanced sowing of Kharif crops, it stated, including, a report procurement of wheat has enabled a circulate of round Rs 75,000 crore to the farmers which is able to enhance non-public consumption in rural areas.

“Since September 2019, the terms of trade have moved in favour of agriculture and has reinforced rural demand. This has manifested in an increase in rural core inflation between March and June 2020. As a result, the push for growth in coming months appears to be pitched in rural India,” it stated.

Pointing on the latest landmark reforms introduced within the agricultural sector, it stated the deregulated and liberalised the agricultural sector, additional, empower the farmers to develop into a much bigger and extra steady participant in India’s development journey.

Talking about some parameters displaying enchancment, the report stated, contraction in industrial exercise, measured by Index of Industrial Production (IIP) and eight-core industries, has eased in May as in comparison with April. Industrial output elevated throughout all sectors and sub-sectors inside IIP in May as in opposition to April.

“Signs of further recovery were witnessed in June with India’s Manufacturing PMI improving from 30.8 in May 2020 to 47.2 in June 2020 with output and new orders contracting at much softer rates than seen in April and May,” it stated.

Services PMI recovered from 12.6 in May 2020 to 33.7 in June 2020, owing to some stabilisation in output ranges with round 59 per cent of corporations reporting no change in output, Four per cent reporting development and 37 per cent reporting discount since May, it added.

There was additionally an uptick in infrastructure and building actions within the unlocking section, it stated, including, contraction within the manufacturing of completed home metal recovered from 41 per cent in May to 31.1 per cent in June 2020. PTI



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