Finance Ministry Says India's Economic Recovery Depends On How COVID-19 Evolves

On Tuesday, the Finance Ministry said that India's economic recovery will depend on how the COVID-19 pandemic unfolds across states in the coming days, especially in industrialized states.

"The economic recovery is crucially linked to how the COVID-19 infection curve evolves across states. The emergence of new hotspots has led states and Union territories to enforce intermittent lockdowns. India's top 12 growth driving states account for 85% of the caseload, with 40% of confirmed cases concentrated in the top two growth drivers, Maharashtra and Tamil Nadu," the finance ministry said in its Monthly Economic Report for July.

Recently released data on India's purchasing managers' index (PMI) for manufacturing showed a decline for the month of July to 46 when compared to 47.2 in June, signalling that local lockdowns imposed across the country by state governments to curb infections amid the demand slump are impacting business activities at the national level.

India started unlocking its economic activities on 1 June. As per government data, active cases reached 5,60,000 by July-end, growing at 166 percent compared to June. The highest growth in active cases in July was seen in Karnataka, Andhra Pradesh, and Jharkhand, which have been worse affected in the second major wave of infections.

On the other hand, growth in recoveries was faster and broad-based across states, growing at 215 percent to reach almost 2 million cases by end-July, thereby exceeding active cases by 5,30,000, the report said. The finance ministry said the highest cumulative deaths by July-end were concentrated in Maharashtra, Tamil Nadu, Delhi, and Gujarat while the greatest rise in deaths was witnessed in Karnataka, Andhra Pradesh, and Assam compared to June.

The pandemic resulted in the greatest fall in GST (goods and services tax) collections in June being witnessed in Haryana and Uttarakhand, followed by Tamil Nadu. Electricity consumption recovered in June compared to May with strongest recoveries in Karnataka, Andhra Pradesh, Punjab, and Chhattisgarh.

"Value of e-way bills, suggestive of intra and inter-state movements of goods, also picked up strongly in June over May, across all states," the report said.

On 3 August, India reported 49,134 fresh coronavirus cases, the highest count in the world for a second day in a row, in comparison, to the count in the US (48,622) and Brazil (17,988), as per data from worldometers.info. India also recorded the most daily deaths from the virus on Monday at 814, which was much higher than the fatalities reported in the day in Brazil (572) and the US (568).