Approval of the long-awaited COVID-19 vaccine provides strength to the optimism on health and economic fronts, the Finance Ministry said in its monthly economic report.
“The effective management of COVID-19 spread despite the festive season and onset of the winter season, combined with sustained improvement in high-frequency indicators and V-shaped recovery along with easing of lockdown restrictions distinguish Indian economy as one riding against the COVID-wave,” the report said.
The new year, it said, has dawned with the approval of the long-awaited COVID-19 vaccine and initiation of vaccination drives in various countries. “This gives strength to the optimism on both health and economic fronts despite continuing surge in global cases and the potential challenge of a mutant strain,” the Monthly Economic Review for December said.
India, the report said, “has been successful in bending the COVID-curve till now, with reducing weekly/daily infections, rising recovery rate (now at around 95 per cent) and one of the world’s lowest case fatality rates”. The downside risk, however, remains due to the spread of the UK variant and fatigue from social distancing guidelines, it said, adding the emphasis on continued observation of ‘COVID appropriate’ behaviour with the due exercise of caution and surveillance needs to be sustained.
Sharing improvement in some of the high-frequency data, the report said the sustained spurt in commercial and industrial activity was further corroborated by continued growth in PMI manufacturing, power demand, persistent improvement in E-way bills generated and highway toll collection rising above pre-COVID levels. Monthly GST collections attained their record levels in December.
The gross GST revenue collected in December 2020 was Rs 1,15,174 crore, the highest since the introduction of Goods and Services Tax from July 1, 2017. The liquidity situation remains comfortable as the accumulation of dollars along with the growth of currency in circulation are enhancing liquidity in the banking system despite the average daily net absorptions by the RBI rose in December compared to the preceding month, the report said.
The credit growth improved sharply as reflected in strong non-food credit rise and overall credit growth, thanks to the Emergency Credit Line Guarantee Scheme (ECLGS), which continues to support robust credit disbursements to MSMEs, with Rs 2.05 lakh crore sanctioned to 80.93 lakh borrowers under ECLGS 1.0. Extension of ECLGS to 26 stressed sectors is a further boost to MSME credit growth. Credit growth is further corroborated by a sharp rise in the incremental credit deposit ratio of banks, as per the report.
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