Like most countries in the world, India was severely hit by the Covid-19 pandemic. In late March, the essential lockdown to curb the coronavirus’s spread brought economic activity in the country to a staggering halt, with the April-June quarter GDP contracting by a massive 23.9 per cent year on year (YoY). Since the gradual lifting of the lockdown, the Indian economy has been on the path of recovery with the July-September quarter GDP contracting by 7.5 per cent, an improvement over various predictions. With economic activity picking up, the country has witnessed various green shoots of recovery, which coupled with a consistent downward trend in number of cases since September, is leading to improvement in business and consumer confidence. The global announcement of the vaccine being authorised brought a wave of relief across markets. In India, two vaccines were given emergency authorisation approval, with the country beginning its vaccination drive across all states from 16 January. The pandemic tested the public healthcare system’s mettle to its limit, but frontline workers kept supporting the larger population through their tireless efforts. According to the health ministry, more than 16,700 personnel would be actively engaged in managing the immunisation sites, to cater to the priority group of 3 crore healthcare and frontline workers. It would then be administered to the elderly, before being made available to the general public. The impact of Covid-19 on the health of the economy has been exceptionally strenuous. However, the government of India has been making consistent efforts to ease the burden on the vulnerable segment of the population and businesses. The Nikkei Manufacturing Purchasing Managers’ Index increased slightly from 56.3 in November to 56.4 in December. A growth above 50 shows expansion, suggesting the economy is on the path of recovery, as a supportive demand environment and firms’ efforts to rebuild safety stocks bolstered another sharp rise in production.
The mass inoculation of the Indian population is expected to boost the growth momentum
Buoyancy in Tax Collection
The Goods and Services Tax (GST) collection for December came in at Rs 1.15 lakh crore — the highest ever revenue collected since GST was introduced in 2017. GST collections came in above Rs 1 lakh crore over the past three months, with the collection in December being 12 per cent more than the previous year’s same period. A further boost to tax collections came in the form of direct tax collections. More than 59 million people filed income tax returns before the deadline compared to 26 million last year. This increase in the number of people filing the returns has helped the government boost its revenues ahead of the Union Budget. As India started the largest immunisation campaign globally, the economy is expected to further improve business sentiment. The central government had to plan this drive keeping in mind the challenges in supply chain and availability of trained health workforce to administer the two-dose vaccine and monitor the adverse effects. To manage the vaccine logistics, 31 main hubs have been identified for distribution to 29,000 vaccination points across states. Crossing the 6-lakh mark on the fourth day of the vaccination drive, the government is looking to accelerate the coverage by better engaging states. While various efforts have been made to address the challenges related to the last-mile supply, the central and state governments are also having to manage vaccine hesitancy among people. According to a National Council of Applied Economic Research (NCAER) study, the Indian industry’s business sentiment is improving, after declining for two consecutive quarters. The survey shows that while the Indian economy is recovering, additional investments will take some time to materialise.
Pick Up in Hiring Expected
With the rollout of the vaccines, companies across sectors and regions have reported an increase in expected hiring. Recent industry data reveals that companies across sectors are looking to hire employees in the first three months of 2021. At the same time, Tier-2 and Tier- 3 cities are becoming hotspots for whitecollar jobs. We have various indicators highlighting the country’s improving economic sentiment, and the mass inoculation of the population will further drive economic growth. The successful deployment of vaccines across the country will most importantly provide a sense of stability to the public at large. It would also accelerate the return of many activities that are either not functioning as yet, or are functioning well below capacity.
Banking on the Vaccine
Sectors such as hotels, airlines, theatres, bars, malls have been the worst hit due to the pandemic. With the vaccines’ rollout, footfalls across these sectors are expected to increase, easing their burden. Many large and medium-size industrial complexes have also been running below capacity, ever since the beginning of the pandemic with social distancing rules in place. Mass immunisation of the population could lead to these units functioning at full capacity again and help the manufacturing sector grow further. The made-in-India vaccines ensure that India would gain a lead in the fight against Covid-19 and move further on the path to economic recovery and growth.
The author is Co-founder and CEO, Primus Partners
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