Front-load NIP expenditure to revive economy, says Aggarwal
A few lead economic indicators have shown an uptick in May 2021 as compared with April 2021 though the second wave of coronavirus have created uncertain economic environment, depressed demand, disrupted supply chain, rising commodity prices and squeezed working capital, PHD Chamber of Commerce and Industry President Sanjay Aggarwal has highlighted in a cautionary note.
The government has to front-load the National Infrastructure Pipeline expenditure for reviving the economy as private investment are not coming in the current COVID-19 hit environment, said Aggarwal.
Five of the 10 lead economic and business indicators of QET (Quick Economic Trends) have shown uptrend in the sequential growth for the month of May 2021 as compared with 3 showing the uptrend in April 2021, said Aggarwal, citing PHDCCI tracking of market trends.
Exports have shown a growth of 5.2% in May 2021 over the previous month of April 2021, followed by railway freight with growth of 3%, stock market with growth of 1.9%, exchange rate with growth of 1.8% and forex reserves with growth of 1.7% for May 2021 over April 2021, said Aggarwal.
However, five indicators including GST collections, e-way bills, passenger vehicle sales, unemployment rate and manufacturing PMI registered a decline in May 2021 over April 2021, he pointed out.
Passenger vehicle sales recorded a contraction of (-)66.3% as sales fell to 88,045 units in May 2021 from 2,61,633 units in April.
The unemployment rate in the country rose to 11.9% in May from 7.97% a month earlier.
MSMEs are facing the challenges of rising input costs and squeezed working capital, while on the other hand, households are diverting their spending on medical needs and deferring their non-essential purchases, noted Aggarwal.
The significant pick up in the economic activity was observed from October 2020 which peaked in January 2021 and started declining from February 2021, while slightly improving in May 2021, he observed.
Do away with the custom duties on the imports of primary raw materials for industrial use for at least current FY 2022 and impose export duties on various primary commodities showing huge price increases, exceeding 50% over the last FY 2021, said Aggarwal.
More and more direct transfer benefits to be considered for the urban and rural poor under the various welfare schemes, he said in a statement on 14 June 2021.
At least 75% of the population of country needed to be vaccinated against COVID-19 with both doses by 2021 to do away with the uncertainty in the economy, Aggarwal pointed out.
A substantial stimulus to create effective strides for futuristic growth trajectory and to diminish the daunting impact of the second wave of the pandemic coronavirus on trade and industry would be crucial to support the economic momentum in this extremely difficult time, he stressed.
If the government undertakes the effective steps and provides a substantial stimulus to combat the impact of coronavirus, a double-digit growth rate of more than 10% in FY2022 will be achievable as anticipated earlier by various forecasting organizations along with the government and RBI before the 2nd wave of pandemic coronavirus, said Aggarwal. #economy #exports #manufacturing #health #investment /fiinews.com
