Lok Sabha Question No. 211 (UNSTARRED), answered on 2021-07-19
Subject: Risk to Economic Recovery
Ministry: FINANCE
Asked by: S. Jagathrakshakan

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 211

TO BE ANSWERED ON 19.07.2021

## RISK TO ECONOMIC RECOVERY

## 211. SHRI S. JAGATHRAKSHAKAN:

Will the Minister of FINANCE be pleased to state:

- (a) whether it is true that there are still a number of risks to durable economic recovery in India;
- (b) if so, the details thereof, along with the steps taken by the Government keeping in view the fact that wholesale price inflation is setting recent records, and core inflation is also at a significantly higher level now;
- (c) whether it is also a fact that while the RBI's Monetary Policy Committee had projected 5.1 per cent inflation for the current fiscal year, this estimate may have to be reconsidered and does not seem to entirely gel with the macro-economic picture provided by the RBI bulletin; and (d) if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a)    Provisional  GDP  estimates  now  available  for  January-March  quarter  (Q4)  of  FY  2020-21 confirm a steady recovery in India's economic prospects in the second half of the year after an unprecedented COVID-19 induced contraction. India's real GDP is estimated to grow at 0.5 per cent in Q3 and 1.6 per cent in Q4 of FY 2020-21 leading to an upward revision in annual real GDP growth from (-)8.0 per cent (2nd Advance Estimates) to (-)7.3 per cent in FY 2020-21. This momentum of economic recovery was, however, moderated by the onset of the second wave of COVID-19.    The Indian economy is showing signs of revival since the peaking of second wave in first half of May 2021 on the back of targeted fiscal relief, strong push for capital expenditure, RBI's monetary policy measures, and a rapid vaccination drive. This is reflected in movement of several  high  frequency  indicators  like E-way  bills,  power  consumption,  rail  freight,  UPI transactions, vehicle registrations, etc.

(b)  Government of India has formulated a multi-pronged strategy to ensure that the prices of essential  commodities  like  pulses  and  oil  seeds  remain  controlled  which, inter-alia ,  include issuance of order imposing stock limits on pulses applicable to wholesalers, retailers, millers and importers  w.e.f  2 nd July  2021,  increasing  number  of  price  monitoring  centres  under  Price Monitoring  Scheme,  setting  up  web  portal  for  real  time  monitoring  of  pulse  prices  and  for declaration  of  stocks  held  by  different  stockholders,  monitoring  speedy  clearance  of  food commodities like Crude Palm Oil at ports, mechanism for pulses retail intervention, increased procurement  and  increased  buffer  stock  targets  and  changes  in  pulses  and  palm  oil  import policy.

(c) and (d) As per RBI's Monetary Policy Committee's (MPC) June 4, 2021 resolution, the rising trajectory  of  international  commodity  prices,  especially  of  crude,  together  with  logistics  costs, pose upside risks to the inflation outlook. However, these cost pressures are expected to be mitigated  by  a  normal  south-west  monsoon,  comfortable  buffer  stocks,  recent  supply  side interventions  in  pulses  market,  declining  caseload  of  COVID-19  and  gradual  easing  of movement restriction across states. Taking into  consideration  all  these factors,  the  MPC  has projected CPI inflation at 5.1 per cent during FY 2021-22 with risks broadly balanced. The MPC continuously reviews the inflation outlook in its bi-monthly meetings.

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