India’s economy is recovering swiftly from the coronavirus-induced slowdown on the back of government policies and a slew of foreign investment, the country’s prime minister said on Saturday.
“We are recovering vary fast and economic indicators are encouraging,” Narendra Modi said while addressing the Federation of Indian Chambers of Commerce and Industry annual convention. “Foreign investors have made a record investment in the country and are continuing to do [so].”
Asia’s third-largest economy announced various steps to stimulate consumer demand, including advance payment of a part of the wages of federal government employees during the festival season in October and stepped up capital spending to bolster the pandemic-hit economy.
In November, India also rolled out more stimulus to rescue companies and save jobs. The additional stimulus amounts to about 9 trillion rupees ($120 billion), taking the nation’s total Covid-19 relief to almost 30 trillion rupees, or 15 per cent of gross domestic product, according to finance minister Nirmala Sitharaman.
“When the pandemic began in February or March, we were fighting against an unknown enemy,” Mr Modi said. “There were a lot of uncertainties – be it production, logistics, the revival of the economy – there were multiple issues. But today in December, the situation has changed. We have answers as well as roadmap for recovery."
India continued to ease movement restrictions to revive business activity, despite a rise in the number of coronavirus cases. As of Saturday, the country had more than 9.8 million infections, over 9.3 million recoveries and 142,662 deaths, according to Worldometer, which tracks the pandemic.
India’s services sector expanded in November, its second consecutive month of growth, helped by new business activity and the first rise in employment in nine months.
The seasonally adjusted India Services Business Activity Index, compiled by IHS Markit, dipped to 53.7 from 54.1 in October. A reading above the neutral 50 level indicates an economic expansion, while a reading below points to a contraction.
India's benchmark equity index has also been buoyant, recording its six consecutive week of gains as foreign investors channelled funds into local stocks.
Net foreign investment in local stocks amounted to nearly $19 billion through to December 9 this year and is the highest since 2013, according to Bloomberg.
India's economy is expected to contract 9.9 per cent in 2020 and expand 7.9 per cent next year, the Organisation for Economic Co-operation and Development (OECD) said in its latest report.