The worst is probably over for the Indian economy, the RBI views in its January 2021 Bulletin, in which it consistently maintains that barring the visitation of another COVID-19 wave, there is an increased probability that our recovery may overtake most projections. Besides the launch of the world’s biggest vaccination drives in the country on January 16, RBI adds that four features set India apart from the rest of the world at this juncture.

First, India has so far succeeded in ducking the second wave of the pandemic. Second, central government expenditure rejoined the celebration of the recovery in November 2020, surging by 48.3 percent y-o-y. Third, rebound in merchandise imports including those of intermediate goods used in supply chains, augurs well for domestic industrial activity and import-intensive exports. Fourth, credit flow has increased, with agriculture, MSME and services sectors getting more funds now.

In addition, the RBI points out that six largest states of the country recorded 87 percent of normal footfalls in public places. Similarly, aggregate demand conditions have improved as reflected by electricity consumption. Both domestic trading, as reflected in issuance of E-way bills, and domestic spending, as reflected by GST collections have improved. Consumer confidence is regaining its groove. These developments are encouraging.

So, there are enough reasons to believe that the Indian economy is coming back stronger, soon. The Budget is ahead, and it will be interesting to see what the annual financial document will hold for the economy. No doubt, the pandemic has pulled down growth in two successive quarters, with projections of GDP contraction of over 7 percent in FY21, but the brightening economic prospects will definitely help the Centre further stimulate the recovery while maintaining fiscal rectitude.

I invite your opinions.