India anticipates V-shaped recovery with vaccination drive and economic growth

The monthly economic report for December 2020 released by the Ministry of Economic Affairs predicts an uptick in India’s economy in the second half of the year, with sustained improvement in high frequency indicators and the approval of two vaccines for emergency use.

January 5, 2021

The government is prepared to undertake a mega vaccination drive, with a ready blueprint, real-time Intelligence Network Co-WIN, and ongoing dry runs

India has been experiencing a V-shaped recovery since June when the gradual easing of lockdown restrictions was initiated

Monthly GST revenues at US$ 15.7 billion stood at an all-time high, 12 per cent more than the previous year

Post-vaccination, the resumption in economic activity is expected to lead to economic recovery in the aftermath of the Covid-19 pandemic

In its monthly economic report for December 2020, the government has predicted an uptick in India’s economy in the second half of the year, with sustained improvement in high frequency indicators along with easing of lockdown restrictions. In addition, the approval of two vaccines for emergency use has provided a much-needed impetus to the V-shaped recovery that the Indian economy expects to see. 

According to the report, the Indian government is well-prepared to undertake a mega vaccination drive, with a ready blueprint, real-time Intelligence Network Co-WIN (a digitalised platform which will provide real-time information of vaccine stocks, their storage temperature and individualised tracking of beneficiaries of the vaccine on a real-time basis) in place, upgradation of cold-chain infrastructure for last-mile delivery, and ongoing dry runs across 125 districts covering all states and UTs.

The country has prepared a blueprint of the mega vaccination drive with plans to begin vaccinating 300 million health workers, frontline workers and vulnerable populations.

India has been experiencing a V-shaped recovery since June when the gradual easing of lockdown restrictions was initiated. Industrial production growth rose to an eight-month high with a growth of 3.6 per cent in October 2020, led by the manufacturing and electricity sector. Though core industries registered slight decline in November (driven by natural gas and cement), coal production, electricity and fertilizers’ production registered growth. Steel production showed sequential growth, indicating an accelerating construction sector.

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 revenues at US$ 15.7 billion stood at an all-time high, 12 per cent more than the previous year. The growth momentum in rail freight traffic remains upbeat, as passenger earnings begin to recover, port cargo traffic grows year-on-year, and domestic aviation picks up further. 

The agricultural sector saw healthy year-on-year growth of 2.9 per cent in rabi sowing, accelerating tractor sales, and reservoirs’ live storage at 122 per cent of the decadal average.

Post-vaccination, the resumption in economic activity and increased mobility are expected to lead towards a path of economic recovery in the aftermath of the Covid-19 pandemic, the report said.