India may be past the first peak of Covid-19 cases as seen in September, according to the country’s Finance Ministry. It said in a report the economy could reach pre-pandemic levels by the end of 2020.

The report indicated a pickup across multiple indicators in October, saying that “The continuous improvement in forward-looking RBI (Reserve Bank of India) indices of consumption and business sentiment for the next year augurs hope of a strong economic rebound.” 

It also cited the International Monetary Fund’s projection of 8.8 percent real gross domestic product growth in the coming fiscal year, which is the “highest globally” and indicates confidence of a strong growth revival in the Indian economy. 

While headline retail inflation stood at 7.3 percent in September, the Finance Ministry said, “Turning to the outlook for inflation, the pressures on prices of key vegetables like tomatoes, onions and potatoes should also ebb by Q3 with kharif (crop) arrivals.”

The favorable monsoon, along with the easing of lockdown restrictions, would mitigate risks of cost-push pressures from supply disruptions and labor shortages, it added.

Despite a 5.4 percent contraction in merchandise exports in October to $24.8 billion, the ministry said it is confident of a sustained current account surplus in subsequent quarters. It cited the trade balance surplus seen in April-September and resilient remittances to support the projection.

“The probable current account surplus in this year, thereby, provides a cushion to increased spending in the economy,” it said.

According to the ministry, the government had identified the construction sector as a potential major catalyst of economic revival given its eight percent contribution to overall gross value added in the past five years, which came up to 15.5 percent counting its allied sectors.

“The sector has a multiplier effect on nearly 250 allied industries with backward and forward linkages – and acts both as a crucial ‘push’ and ‘pull’ peg in the growth story of India,” said the report.

For more stories on economy & finance visit RT’s business section