Page 634 - ES 2020-21_Volume-1-2 [28-01-21]

08

Industry and Infrastructure

CHAPTER

“In the midst of every crisis, lies great opportunity.”
―Albert Einstein

The Indian economy encountered a “once in a century” crisis due to the COVID-19
pandemic that affected economic activities and consequently impacted the livelihood of
billions of people. The industrial sector, not an exception to this shock, experienced a
sharp decline during the period of the lockdown. The economic activity, however, started
recovering as the unlocking process began. The various subcomponents of Index of
Industrial Production (IIP) and eight-core index have experienced a V-shaped recovery
with consistent movement being seen towards the pre-crisis levels. The broad-based quick
revival of the industrial activity stemmed from remedial measures, reforms, and the sizable
stimulus package announced by the Government of India (GoI) under the Atmanirbhar
Bharat package. Based on the IIP, the industrial activity contracted by 1.9 per cent
in November-2020 recovering from the nadir of -57.3 per cent in April-2020. Further
improvement and firming up in industrial activities are foreseen with the Government
enhancing capital expenditure as highlighted in the fiscal policy chapter, the vaccination
drive and the resolute push forward on long pending reform measures. It is pertinent
to point out that the reforms undertaken in the country are probably one of the most
comprehensive among the major economies of the world.

INTRODUCTION

8.1 The financial year 2020-21 (FY21) began amidst a global pandemic, the management of
which led to countries adopting unprecedented measures that brought the economy to a grinding
halt. The lockdown and the corresponding restrictions on local and global movement of people and
goods, except for essential goods and services, was an exogenous shock that posed considerable
challenges to the economy, created uncertainty, was responsible for extensive loss of livelihoods
and led to the displacement of people. The unlocking of the economy in a phased manner has
helped the economy to get back on its feet. The rebuilding of the Indian economy is hinged on
various reform measures aimed at addressing concerns of businesses and support to livelihoods.
India implemented policies aimed at reducing transaction costs, supporting Micro Small and
Medium Enterprises (MSMEs), enhancing competition, fostering employment creation and
securing sustenance through the Atmanirbhar Bharat Abhiyan. The performance of the industrial
sector is critical given its deep backward and forward linkages with the other sectors of the
economy. A strong industrial sector is a sine quo non for an Atmanirbhar Bharat. Any initiative
aimed at securing a rapid recovery needs to keep industry concerns at the core of its intervention.