The Reserve Bank of India (RBI) last week released its Annual Report for the year 2021-22, in which the central bank sheds light on several key economic issues, including global economic risks, domestic growth prospects and challenges facing the Indian economy at this juncture. At a time when our economy is reeling under the pressure of global geopolitical tensions, high inflation, adverse weather condition and other issues, the insights provided by the RBI report are worth discussing.

The report points out that while in 2021 the Indian economy was battered by several waves of the Covid-19 pandemic, supply side and logistic related issues, high inflation and negative financial market conditions, from late February 2022 a whole new crisis has reared its head in the form of the Russia-Ukraine war, and as a result, there are challenges abound ahead, though the momentum of economic recovery can broadly be expected to continue through the ongoing financial year.

On GDP front, RBI sticks to its revised growth figures of 7.2 percent while on inflation the central banks views that a lot will depend on the evolving geopolitical situation. The report, despite expecting better days ahead for the agriculture sector, emphasizes on raising farm productivity and adds that revival of economic activity is evident also across other sectors, but this needs to be "assiduously nurtured in order to boost consumer and business confidence and private investment".

Overall, RBI is of the opinion that the Indian economy - like most of the emerging market and developing economies- has been bearing the brunt of the ongoing Russia-Ukraine war, but despite several headwinds, its recovery is still underway, and in order to pave the future path of growth, the Centre must address the supply-side bottlenecks, come out with targeted fiscal support measures, and continue structural reforms while tightening the noose over rising inflation should be the focus of the central bank.