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Indicators focus on financial recovery, but recovery can be fragile: the report

The economy is expected to shrink by 13.5 per cent in the second quarter (July-September) and the contraction in FY 21 (April 2020 to March…


The economy is expected to shrink by 13.5 per cent in the second quarter (July-September) and the contraction in FY 21 (April 2020 to March 2021) will be around 9.5 per cent unless the government takes immediate action. Revive the economy.

“After six months of intense tensions due to the closed lockdown so far, there is finally good news for the economy. Some high-frequency indicators are focusing on economic recovery,” the report said.

The manufacturing PMI rose to 56.8 in September from 52 in August, the highest in eight years.

GST collection here Compared to last year, in September, it has increased by Rs. 800 crore 3. August and it has increased by 10 per cent as compared to August. Passenger vehicle sales grew by 31 per cent, while rail freight grew by 15 per cent.

After a gap of six months, trade exports have led to overseas exports of engineering goods, petroleum products, pharmaceuticals and readymade garments. Electricity demand and production also increased.

“However, there are indications that this recovery is fragile. Capital spending on new projects fell by 81 per cent in the second quarter compared to the same period last year, while investment continued to decline, the rating agency said.

The core sector grew by (-) 8.5 per cent in August.

Credit deposits declined in the three forts that ended on September 11, 2020, and non-gold, non-oil imports continued to decline.

The GDP contraction in the first quarter was 23.9 per cent and all sectors except agriculture and allied sectors faced negative growth rates.

The construction sector (-30..3 per cent) contracted sharply, followed by trade, hotels, transport, storage and transportation (-47 per cent) and manufacturing (-39.3..3 per cent).

“While the economy appears to have improved, contraction in the sector is likely to ease, albeit at a slower pace,” it said.

Noting that the crisis is the mother of reforms, Brickwork Ratings said that the government has taken part in some important reforms to address the problems in the agricultural sector and give more flexibility to the labor market.

“The merger of the 24 Central Labor Laws into four codes is a significant reform to provide more flexibility to the labor market and to end inspector kings,” it said.

It said the structural reforms were important to improve the economic environment, make it easier to do business and end the observer regime.

“However, the government must act urgently to remove the bottlenecks in the supply chain and increase the overall demand to get the economy out of the mindset,” he said.

“This requires the government to take measures to increase public spending, implement banking reforms to encourage police and judicial reforms to protect lives and property, implement agreements and reverse the protectionist trend that has waned in the last three years in terms of interests. The agency said.

Brickwork Ratings said the stimulus package announced so far does not require a substantial financial package.

For a rapid economic recovery, the government needs to loosen its purse to increase overall demand, he said.

“There should be less vote on financial targets for the current and next year. “Importantly, events like privatization (Air India) to increase public investment spending by disinvesting can increase public spending,” the agency said.

This story has been published from the Wire Agency feed without altering the text. Only the caption has been changed.

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