The second wave of Covid-19 in India poses a downside risk to economic activity in the first quarter of FY22, the Finance ministry has said in its Monthly Economic Review Report for April 2021. However, the government expects a “muted economic impact” of the second wave compared to first wave.
In April, due to the second wave in India, the momentum in economic recovery since the first wave has moderated.
“Learning to operate with Covid-19, as borne by international experience, provides a silver lining of economic resilience amidst the second waves,” the Finance Ministry emphasized.
The softening food and fuel prices, normal monsoon and expected easing supply of food products, “may provide succour to a potent risk of rise in input prices surfacing as retail inflation,” the Finance Ministry added.
– Agriculture continues to be the silver lining with record foodgrain production estimated in the ensuing crop year on the back of predicted normal monsoons.
Rural demand indicators like tractor sales recorded a growth of 172 per cent and 36 per cent compared to a low base in March 2020 and even the pre-COVID month of March 2019 respectively.