Aditya Birla Group Chairman Kumar Mangalam Birla expects the second wave of Covid-19 to some reassessment of growth estimates in the financial year 2021-22.

The Indian economy, which was firmly on the path of recovery in the second half of last fiscal, was hit by a rather unexpectedly virulent second wave of Covid, said Birla in UltraTech Cement annual report.

However, he said as a silver lining, disruptions to production and supply chains have been far less severe during the second wave than in the first wave.

Vaccinations are picking up pace, which would support faster normalisation of mobility levels and of related economic activities, he said.

The cement industry witnessed a de-growth of 10-12 per cent due to the Covid pandemic. The Covid-induced lockdown from late March to end-April 2020 was a huge challenge for all manufacturing industries. However, with the Central and State governments taking measured steps towards unlocking the economy, some encouraging trends were seen from the latter part of May 2020.

Since then, the industry has been on a volume growth path driven mainly by the government’s ‘Housing for All by 2022’ mission and large infrastructure projects.

The government spending on infrastructure projects and affordable housing schemes such as the Pradhan Mantri Awas Yojana with enhanced budgetary allocations remain the primary drivers of growth for the cement industry, he said.

Key factors

Continued accommodative monetary policy of the RBI and the expected increase in capex from the Government are factors that will support growth recovery. In addition, global growth prospects provide us with exports as an additional strong driver of growth, said Birla.

The longer-term prospects for the Indian economy continue to be robust. Various initiatives, including privatisation of public sector enterprises, monetisation of assets, implementation of National Infrastructure Pipeline, targeted investment incentives through the production-linked incentives scheme and the new Labour Code, are likely to spur a virtuous cycle of investments and growth in the medium term, he said.