India’s economy is showing strong signs of recovery as the second wave of the ongoing Covid-19 pandemic reduces in severity. Notably, the business resumption index (BRI) is now at 95.3 which is only 4.7 per cent less than the pre-pandemic level. It should be noted that the index went down to 60 per cent during the peak of the Covid-19 second wave creating havoc across the country. At the same time, gross tax collection has reached 24 per cent of the budgeted estimates within the first quarter of the current financial year. GST and excise collections have also gone up. The GST collection was INR 1.16 lakh crore in July. On the contrary, in the months of May and June this year, the GST collection was INR 1.02 crore and 92.849 crore respectively. These figures highlight the fact that during the first quarter of the current fiscal year, the economy had done well in comparison to the first quarter of the previous fiscal. With economic activities picking up, the demand for energy is also rising. It can be safely concluded that the Indian economy has not done poorly during the second wave of the pandemic and has rather made a remarkable comeback with the easing of restrictions.
Experts are divided over ascertaining the causes that made the turn-around possible. While some believe that localised lockdown instead of a nationwide one like the first wave has kept the economy moving. Others are of the opinion that it is the result of the ongoing vaccination drive and strict adherence of Covid safety norms that has allowed economic activities to continue even amidst tremendous adversity. But whatever the reason may be, the turnaround by the Indian economy is remarkable. The current economic situation indicates that the Indian economy is poised to regain the status of being the fastest growing economy of the world.
To regain the honour, the need is to increase public expenditure. More funds should be allocated for infrastructure development projects which will help generate employment and in turn increase government revenue. Additionally, the government should continue with all welfare schemes initiated to counter the adverse effect of the pandemic on the economy. Understandably, this is not an easy task to perform especially keeping in mind that thus far, the government is nowhere near its disinvestment target of INR 1.75 lakh. The government has barely managed Rs. 7,645 crore by disinvesting its assets and it will be difficult for the government to generate enough funds if the target is not achieved.
Currently, the government is in no position to stall developmental activities because of paucity of funds. The pandemic has put tremendous burden on the economy. Expenditure in the health sector and as well as spending for welfare measures have gone up considerably. Such expenditures are putting immense pressure on the state’s exchequer but, at the same time curtailing such expenditures will affect the economy grievously. So, the government will have to find an alternative path to fund development works to keep the economy moving apace .