Indian financial system on path to swift restoration: Finance Ministry report

Strategic reforms and the speedy vaccination drive has positioned the nation on the trail to swift restoration by enabling the financial system to “navigate the ravaging waves” of the COVID-19 pandemic, in accordance with the Finance Ministry‘s Monthly Economic Review.

Sustained and strong development in agriculture, sharp rebound in manufacturing and business, resumption of companies exercise and buoyant revenues counsel that the financial system is progressing nicely, the September evaluation mentioned.

“India is well-placed on the trail to swift restoration with development impulses visibly transmitted to all sectors of the financial system… Strategic reforms undertaken to date together with new milestones in vaccination drive have enabled the financial system to navigate the ravaging waves of the COVID-19 pandemic,” it mentioned.

The exterior sector continues to supply vibrant prospects to India’s development revival because the nation’s merchandise exports crossed the USD 30-billion mark for the sixth consecutive month in fiscal 12 months 2021-22, it mentioned.

With merchandise commerce deficit additionally rising in September, there’s clear proof of consumption and funding demand can also be choosing up in India, it mentioned, including, the exterior debt-to-GDP ratio continues to stay snug, declining to twenty.2 per cent on the end-June 2021, from 21.1 per cent on the end-March 2021.

In tandem with development impulses witnessed throughout the financial system, the report mentioned, the speed of development of financial institution credit score stood at 6.7 per cent YoY within the fortnight ending September 10, 2021 in comparison with 5.3 per cent within the corresponding interval of the earlier 12 months.

With restoration of provide chains, improved mobility, and softening meals inflation, shopper worth index (CPI) inflation retreated to a 4 month-low of 5.3 per cent in August 2021, clearly demonstrating that inflationary tendencies are pandemic-induced and transitory.

Nonetheless, it mentioned, risky costs within the worldwide crude oil markets and upward-bound costs of edible oils and steel merchandise might proceed to pose issues.

Comfy ranges of systemic liquidity and softening of inflationary strain have additionally lent stability to G-Sec yields in September 2021. The ten-year yield remained unchanged at 6.2 per cent in comparison with August.

Newest developments in high-frequency financial indicators in August and September additional point out a broad-based restoration evidenced in sustained enchancment in energy consumption, rail freight exercise, e-way payments, strong GST collections, freeway toll collections posting a 21-month excessive, sequential uptick in air freight and passenger site visitors, and quantum leap in digital transactions.