Signs of Economic Recovery: CII | 29 Jul 2020

Why in News

Recently, the Confederation of Indian Industries (CII) has said that there are early signs of a V-shaped recovery in the economy in the immediate aftermath of the lockdown.

Key Points

• Economic Recovery:
  
  • Economic recovery is being driven mostly by agriculture and rural lending.
    
    • CII noted that rural lending by Non-Banking Financial Companies (NBFCs) is at about 80% of the usual levels.
  • The Fast-Moving Consumer Goods (FMCG), pharma and construction have also contributed to the positive trends of economic recovery.
    
    • FMCG is likely to grow at 15-20%, on account of an increase in in-house consumption of food and greater demand for sanitation and hygiene products.
    • The construction sector, which has a large employment multiplier impact on the economy is also recovering back, with most construction sites resuming operations.
• Reasons:
  
  • The positive recovery has been predicted based on the increase in Goods and Services Tax (GST) collections, railway freight traffic, petrol consumption, peak power demand and electronic toll collections.
  • There are also expectations of a bumper harvest in the wake of a normal monsoon.
• Suggestions:
  
  • In order to nurture the nascent signs of economic recovery, CII has argued to mitigate the uncertainties that are currently prevailing due to mini lockdowns imposed due to Covid-19 pandemic.
    • It has argued to limit the containment zones to micro areas to ensure that business activities are allowed to function seamlessly.
  • CII has recommended a dashboard approach, where the progression of infections would trigger predictable responses in a way that would reduce uncertainty and boost consumer and industry confidence.

Source: TH