Economy regaining momentum: RBI

As economic activities gather momentum and strive to get back to pre-COVID levels, the Reserve Bank of India (RBI) has said that the Indian economy is reflating at a pace higher than most predictions.

The monthly bulletin of the central bank for December said the more evidence has emerged since the last bulletin which shows that the Indian economy is coming out of the COVID-induced slowdown.

“Since the assessment presented in the last month’s article, more evidence has been turned in to show that the Indian economy is pulling out of COVID-19’s deep abyss and is reflating at a pace that beats most predictions,” it said.

It noted that economic conditions continued to improve through November 2020 on the back of the uptick in agriculture and manufacturing activity.

In the June-September quarter, India’s GDP on a year-on-year basis contracted by (-) 7.5 per cent, narrowing from (-) 23.9 per cent in the preceding quarter.

In its last monetary policy meet, the RBI revised the real GDP growth projection for FY21 upwards to (-) 7.5 per cent on the back signs of faster recovery after the narrowing of the GDP contraction for the July-September, along with hopes of Covid-19 vaccines. It was an upward revision from the earlier estimate of (-) 9.5 per cent.

Post the last MPC meet, RBI Governor Shaktikanta Das had said that the growth will enter positive zone in the third quarter of current fiscal with projection that GDP may grow at 0.1 per cent and the growth will further improve in Q4 to 0.7 per cent.

In its December bulletin, RBI also said that financial conditions embodied in interest rates are perhaps at their easiest in decades. Although headwinds blow, steadfast efforts by all stakeholders could put India on a faster growth trajectory, it added.