The finance ministry on Tuesday said the economic impact of the second wave of the COVID-19 pandemic is likely to be muted and there are visible signs of economic rejuvenation.
The latest Monthly Economic Review, released by the finance ministry, said the “robust recovery in tax collections cushions the fisc towards meeting the budgeted support to the economy”.
It also said the recent sero-prevalence results signify that India can reduce the likelihood of severe illness due to COVID-19 if the country sustains the momentum of the vaccination programme.
“Having antibodies reduces the probability of acquiring serious illnesses, as is borne by studies. So, any subsequent waves are expected to be mild in terms of severity of disease,” the ministry said in the report.
However, it is imperative that COVID-appropriate behaviour and due protocol is followed. At this juncture, it said, the economy and society are at a crucial inflection point where sustenance of economic recovery, vaccination progress and COVID-19 appropriate behavioural strategies are needed in close synergy with each other. With the second wave abating in most parts of the country and state governments lifting the restrictions in phases, there are visible signs of economic rejuvenation since the second half of May, it said.
“This resonates with the economic impact of the second wave expected to be muted,” the report added. Noting that inflation has remained above the band of six per cent in May and June, the report said these pressures are likely to smoothen out in the coming months, with easing of restrictions, progress of southwest monsoon, and recent supply-side policy interventions in pulses and oilseeds market.
It said that while systemic liquidity continued to remain in surplus in July, a decline in growth of cash in circulation reflected a shift away from the pandemic-induced precautionary savings.