It’s time to put India on a new path of sustainable growth: RBI article


MUMBAI: With the vaccination campaign accelerating and the death rate from Covid-19 falling, it is time for India to embark on a new trajectory of sustainable and inclusive growth, an article from the Reserve bank on “the state of the economy”.
Domestic demand is strengthening as aggregate supply conditions recover, fueled by the strong performance of Kharif agricultural production and the revival of manufacturing and services, according to the article written by a team of RBI officials. headed by Deputy Governor MD Patra.
Amid heightened global risks, India’s economy is gaining momentum, although the recovery is patchy and dragging through soft spots. mortality and normalization of mobility restored confidence, ”he noted. .
He added that lower than expected food prices have helped reduce headline inflation and move closer to the Reserve Bank’s target.
Noting that India will need policies that channel energies to win back the demographic dividend, the article says “we can do it – recent outlook updates cite India’s strong fundamentals, downside risks. ‘negative feedback between the real economy and the financial system, high capital cushions and abundant liquidity. ”
“The time has come to put India on a new trajectory of sustainable and inclusive growth. After all, October marks the end and the beginning of things, a symphony of permanence and change,” he said.
He warned that the opinions expressed in the article are those of the authors and do not necessarily represent the views of the Reserve Bank of India (RBI).
The article also argued for longer political support for a sustainable and inclusive recovery, arguing that choosing the policy mix would require careful consideration and sensitivity “because jobs are expected to be weigh on the recovery, people who have lost income and jobs, and those who have jobs have lost their purchasing power. ”
He further said hiring prospects were improving ahead of festivals, with hiring of newbies increasing at the fastest rate.
IT is the leader in terms of intent to hire, followed by education services, healthcare, and pharmaceuticals.
Reflecting the surge in domestic economic activity, India’s merchandise imports hit a historic monthly high of $ 56.4 billion in September, while imports rose nearly 50% in the month per compared to the corresponding level before the pandemic, fueled by strong domestic demand for petroleum products, gold, vegetable oil and electronics.
Looking ahead, he said, the main downside to the outlook for India’s economy, ignoring the pandemic, is the possibility of a sudden escalation in global risks.
“First, there are now clearer indications that the dynamics of global growth are slowing, especially in countries that were to be the main drivers. Retail spending, global car sales, industrial production and global merchandise trade have moderated, with shortages worsening in key sectors such as semiconductors and shipping, ”he said. declared.
Second, the pandemic has put global trade at risk, the report said, adding that it has had an unprecedented impact on container shipping and global supply chains, forces that have kept globalization strong.
Port congestion in the United States, Europe and Asia has disrupted shipping schedules and equipment shortages, especially in exporting countries, and created disruptions in supply chains.
The article also pointed out that high inflation levels among developed and developing countries are widely seen as transient, but the feeling is that it should stay longer, at least until 2022.