July 31, 2020
The world is facing an unprecedented crisis with the highly contagious COVID-19 hitting major economies across the world in rapid succession. As on August 03, 2020, COVID-19 has had 1,856,754 people infected in India, claiming 38,993 lives.
India imposed a strict lockdown from March 25, 2020 to control the effect of COVID-19 pandemic. Economy was under complete standstill in April and resumed partially with restrictions on various activities in May as the Government made a courageous choice of supporting livelihoods. In June 2020, country entered the unlocking phase and witnessed green shoots in the economy.
Payments on Unified Payments Interface (UPI) hit an all-time high of 1.34 billion in terms of volume with transactions worth nearly Rs 2.62 lakh crore (US$ 37.17 billion) in June 2020.
As on July 17, 2020, total kharif crops were sown on 691.86 lakh hectares against 570.86 lakh hectares during the corresponding period last year, an of increase of 21.20 per cent in area coverage compared to last year in the country.
Government of India introduced Pradhan Mantri Garib Kalyan Yojana to provide immediate cash support to the needy. More than 42 crore poor people have so far received financial assistance of Rs 65,454 crore (US$ 9.29 billion) under the scheme. The estimated cost of distribution of food grains (rice and wheat) and pulses under Pradhan Mantri Garib Kalyan Anna Yojana, extended till the end of November 2020, is Rs 1,48,938 crore (US$ 21.13 billion). Since July 01, 2020, a total of 19.32 LMT food grains have been lifted by various States and Union Territories (UTs) under Pradhan Mantri Garib Kalyan Anna Yojana 2.
In May 2020, Government, adding to its past measures and that of RBI (Reserve Bank of India), announced a consolidated stimulus package of Rs 20 lakh crore (US$ 283.73 billion). The stimulus package was pivoted on “Atma Nirbhar Bharat”, where Micro, Small and Medium Enterprises (MSMEs) received a huge financial package in terms of collateral free debt, guarantee for subordinate debt through Funds-of-Funds, and interest subvention scheme. Besides, the definition of MSME was changed to remove hindrance against their investment and expansion. Other components of the package included three landmark ordinances related to Essential Commodities Act, Farmers’ Empowerment and Protection, and Promotion and Facilitation of Agricultural Produce to encourage people to invest in creating infrastructure and storage for agricultural produce, enable barrier-free trade in agriculture, and empower farmers to engage with various stakeholders.
Government also introduced Pradhan Mantri Garib Kalyan Rojgar Abhiyaan, a rural infrastructure and employment generation scheme, for the benefit of returnee migrants.
These green shoots have a conducive policy environment to grow further and nudge the economy early on the path of economic recovery and growth.
India’s real GDP growth rate was 4.2 per cent in 2019-20 as per the provisional estimates released by National Statistical Office (NSO) compared to 6.1 per cent recorded in the previous year. Nominal GDP for the year was estimated at Rs 203.4 lakh crore (US$ 2.88 trillion), lower compared to the budget estimates.
The growth of real Gross Value Added (GVA) at basic price was 3.9 per cent in 2019-20 (provisional estimates) compared to 6.0 per cent in 2018-19 (revised estimates).
The share of total final consumption (private and public consumption) in GDP at current prices was estimated at 72.0 per cent in 2019-20 compared to 70.4 per cent in 2018-19.
India registered a trade surplus for the first time in almost 18 years. Merchandise export in June 2020 stood at US$ 21.91 billion.
Fixed investment rate (ratio of gross fixed capital formation to GDP) was estimated at 27.5 per cent in 2019-20 compared to 29.0 per cent in 2018-19. The growth in real fixed investment was estimated to decline 0.6 per cent in 2019-20 compared to 9.8 per cent in 2018-19.
As on July 03, 2020, growth of M3 (Broad Money) increased to 12.4 per cent (y-o-y) compared to 10.4 per cent a year ago.
India’s Index of Industrial Production (IIP) for May 2020 stood at 88.4 compared to 53.6 for April 2020, indicating a graded pickup in industrial activity in the economy.
Some other infrastructure indicators
The number of telephone subscribers in India increased to 1,169.44 million at the end of April 2020. The overall tele-density in India stood at 86.66 at the end of April 2020 – urban tele-density was 140.06 and rural tele-density was 58.58 in this period.
The traffic handled at major ports grew 0.8 per cent to 704.8 million tonnes in 2019-20, up from 699.1 million tonnes in the corresponding period the previous year.
The total installed capacity for electricity generation was 371,054.12 MW at the end of June 2020. Of this, thermal, hydro, renewable, and nuclear sources had a share of 62.3 per cent, 12.3 per cent, 23.6 per cent, and 1.8 per cent, respectively.
The Rupee exchange rate (Re/US$) stood at 75.53 by the end of June 2020 compared to 75.64 at the close of May 2020.
Net foreign direct investment (FDI) was US$ 49.97 billion in 2019-20 viz-a-viz US$ 44.36 billion in 2018-19.
India attracted net FDI of US$ 2.0 billion during April 2020 and US$ 2.4 billion during May 2020. Net FPI inflow in June 2020 stood at US$ 3.1 billion, recording the highest inflow since March 2019. This also reflects the unshaken belief of foreign investors in India’s macroeconomic fundamentals, Government policies and growth prospects despite credit rating agencies downgrading India’s sovereign rating.
India's foreign exchange reserve was Rs 39.10 lakh crore (US$ 522.63 billion) in the week up to July 24, 2020 according to the data from RBI.
Wholesale Price Index (WPI) for 'All Commodities' increased to 119.3 in June 2020 from 117.7 in May 2020.
Consumer Food Price Index (CFPI) – combined inflation was 7.87 per cent in June 2020 compared to 9.28 per cent in May 2020. The annual consumer price inflation increased to 4.8 per cent in 2019-20 from 3.4 per cent in 2018-19.
The combined index of eight core industries stood at 100.7 in April-June 2020.
Signs of recovery was witnessed in June with India’s Manufacturing PMI improving from 30.8 in May 2020 to 47.2 in June 2020. PMI services recovered from 12.6 in May 2020 to 33.7 in June 2020.
Note: Conversion rate used for June 2020, Rs 1 = US$ 0.01324