Prospects brighten for economy as second wave of Covid-19 wanes: RBI


RBI said the trajectory of inflation is declining more favorably than expected.

New Delhi: The Reserve Bank of India (RBI) said on Thursday the outlook was improving for the economy reaching an exit speed from the Covid-19 pandemic as the second wave wears off. The central bank, in its monthly bulletin, mentioned that preparation for the future remains on war alert. Commenting on the state of the economy, he said: “Aggregate demand is gaining ground, while on the supply side, PII and basic industries reflect improving industrial activity and market indicators. service sector indicate a sustained recovery “.

The Reserve Bank also said the inflation path was turning more favorably than expected.

“As pandemic scars heal and supply conditions are restored with productivity gains, a lasting easing of core inflation can be expected, which will strengthen the favorable monetary policy stance. to growth, ”the RBI bulletin notes.

The consumer inflation rate in August fell to 5.30% from 5.59% in July.

“The decline in the prices of various food products is expected to continue into the third quarter and contain upward pressure on fuel prices and base prices on headline inflation. The task now is to consolidate these gains and carry them forward. also in the fourth quarter, “RBI added in its September newsletter.

Earlier today, RBI Deputy Governor Michael Patra said India’s inflation is only expected to slow gradually. He added that the outlook for growth and inflation will help determine the future direction of the central bank’s monetary policy.

Mr Patra said the economy is emerging from the second wave of Covid in a more resilient way compared to the first.

The RBI’s Monetary Policy Committee (MPC) unanimously voted to keep the key repo rate at 4% in August.

Separately, the Reserve Bank on Thursday also released its annual publication titled “Handbook of Statistics on the Indian Economy, 2020-21” (HBS). This publication, the 23rd in the series, disseminates time series data on various economic and financial indicators relating to the Indian economy.

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