Principal Economic Adviser Sanjeev Sanyal on Friday said that there has been significant return of momentum in the economy.
“Starting from June to September quarter, and particularly with the number for September, we did see a very significant bounce back and that appears to have sustained in October,” he said in an interview with CNBC-TV.
Sanyal added that sectors like hospitality and entertainment are also now bouncing back.
“There are still some sectors like hospitality and entertainment that were still under some form of restrictions even into November. But it appears that wherever restrictions are removed, significant momentum does come back.”
However, he warned that there is a possibility of second COVID-19 wave. “It is not the case that we should stop being vigilant, but to the extent that we have visibility, we can see that momentum has come back.”
According to Sanyal, global economy is a concern. He said the global economy still looks to be in a 'stop-start-stop' kind of phase. Fresh lockdowns and rising cases in the UK and the US is also a cause of concern, Sanyal explained.
He further added that India unlike other economies did not face any macroeconomic and stability issues. “Inflation has spike up because of disruptions in the food supply chain, but there is no sustained, demand driven inflation in the system. If anything, inflation will ease off quite sharply after January.”
Sanyal pointed out that the government will not hold back on spending when infrastructure creation is concerned.
“During the lockdown, it locked down everything, including our spending. There were monies that were lying around and so they were expended. But as things open and the construction work and other things get done, there will be draw downs. What we are telling you is that as and when those draw down are done and there is more resources needed for those infrastructure projects, they will be made available,” he said.