India, RBI in an article on the state of economy said, is battling spurt in new infections and mortalities, perhaps the fastest for any country of continental dimensions.
Amid a massive rise in COVID-19 infections during the second wave, the only way forward is speedier vaccination, ramping up of health infrastructure and observance of pandemic protocols, an RBI article said. India, RBI in an article on the state of economy said, is battling spurt in new infections and mortalities, perhaps the fastest for any country of continental dimensions. Observing that healthcare infrastructure and vaccine supplies are strained, financial markets are reeling and earnings forecasts face downgrades, the article said, “Yet this too shall pass. We have seen off the first wave, and we have largely adapted”.
“Pandemic protocols, speedier vaccination, ramping up hospital and ancillary capacity, and remaining resolutely focused on a post-pandemic future of strong and sustainable growth with macroeconomic and financial stability is the way forward,” said the article authored by RBI Deputy Governor M D Patra and other officials. The article said as India battles the ferocious rise of new infections, a strong policy response is building. Economic activity in India is holding up against COVID-19’s renewed onslaught.
Apart from contact-intensive sectors, activity indicators largely remained resilient in March and grew beyond pre-pandemic levels. The resurgence in COVID-19, if not contained in time, risks protracted restrictions and disruptions in supply chains with consequent inflationary pressures,” it said. The central said 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 early results of corporate performance in January-March 2021 indicate strong growth in revenues and net profits. Unlike in preceding quarters, this was driven by a pick-up in demand and order inflows. “Rising digitalisation is the engine powering a stellar performance of IT companies in the quarter. Capacity utilisation is steadily rising, and the latest round of the RBI’s Industrial Outlook survey envisages further expansion through the first three quarters of 2021-22,” it said.
The authors said electricity consumption, a real-time indicator of economic activity since it cannot be stored, has risen sharply in April on top of steady growth in seven preceding months. Also, merchandise exports have posted a robust uptick in the first week of April 2021.
“It is not out of place to hope that these positive monthly developments reinforce each other and extend into a continuum that spans the medium-term. “There will be pitfalls along the way, but it is important to remain focused on the destination rather than the journey,” the article said. The outlook for the Indian economy is bright by any projection, it added.