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Indian economy continues to forge ahead: RBI article

16 Dec 2021 Evaluate

An article on the state of the economy published in RBI Bulletin said that upbeat high-frequency indicators and consumer confidence show that the Indian economy continues to forge ahead, emerging out of shackles of the pandemic. The recovery is spearheaded by an uptick in private investment through November-December alongside a turnaround in bank credit offtake and high capex from the government sector (Centre and States). It said in conjunction, the employment situation has brightened. It added ‘The outlook remains upbeat, though concerns revolving around the spread of the new Omicron variant are surfacing’. The RBI clarified that the views expressed in the article are those of the authors and do not necessarily represent the views of the Reserve Bank of India.

The article further said indicators of aggregate demand point to sustained recovery across spheres, but with signs of sequential moderation. Even as E-way GST bills generation remained above pre-pandemic levels, there was some sequential dip in November on account of festive season fatigue in the first half of November. However, E-way bills generation has picked up again in December (up to December 12) posting sharp month-on-month growth. It said ‘The end of the festive season reflected in moderation in the growth momentum of petroleum consumption, led by a decline in diesel even as petrol consumption remained above pre-pandemic levels and aviation turbine fuel recorded a steady pick-up in November 2021’.

The article also said global supply chain and logistics disruptions continued to weigh heavily on the domestic automobile sector. The supply bottlenecks thwarted festive season sales of motor vehicles. The global economy remains hostage to heightened uncertainty, with Omicron sparking fresh containment measures. The Indian economy bounced back strongly in the second quarter of 2021-22, with GDP surpassing its pre-pandemic levels, and inflation broadly aligning with the target. A host of incoming high-frequency indicators are looking upbeat and consumer confidence is gradually returning. Aggregate demand conditions point to sustained recovery, albeit, with some signs of sequential moderation.

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