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Barring another Covid wave, the worst is behind India: RBI
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SME Times News Bureau | 21 Jan, 2021
The Reserve Bank on Thursday said barring the visitation of another wave
of coronavirus, the worst is behind India, as recent high frequency
indicators suggest a strong recovery.
"Soon the winter of our discontent will be made glorious summer," the RBI said in its January Bulletin.
"Cross-country comparison indicates that India is on the move, ahead of other economies."
It
said the six largest states - Maharashtra, Tamil Nadu, Uttar Pradesh,
Karnataka, Gujarat and West Bengal - recorded 87 per cent of normal
footfalls in public places, the best levels so far in the pandemic.
"Domestic
trading activity as reflected in issuance of E-way bills expanded at a
brisk pace, even over a high base, posting a growth of 15.9 per cent
y-o-y - intra-state by 17.3 per cent and inter-state by 13.8 per cent."
"In
fact, the number of E-way bills issued during December 2020 was the
highest, suggesting that the recovery is no longer aloft on the fleeting
tailwinds of festival spending but is rising Phoenix-like on the wings
of an intrinsic momentum."
Besides, it said that aggregate demand
conditions has either consolidated recent gains or vaulted up on
strengthening pace in December 2020.
"Electricity consumption expanded at 5.0 per cent y-o-y, maintaining its growth for the fourth successive month."
"Northern
and central states such as Madhya Pradesh (15 per cent), Rajasthan (12
per cent), Bihar (14 per cent), Punjab (12 per cent) and Uttar Pradesh
(10 per cent) experienced a surge in power demand in December due to
increased heating load."
According to the bulletin, financial
markets remain ebullient with EMEs receiving strong portfolio inflows
and India on track for receiving record annual inflows of foreign direct
investments.
It pointed out: "What will 2021 look like? The shape of the recovery will be v-shaped after all and the 'v' stands for vaccine."
On
January 16, India launched the biggest vaccination drive in the world,
backed by its comparative advantage of having the largest vaccine
manufacturing capacity in the world and a rich experience of mass
inoculation drives against polio and measles.
"If successful, it
will tilt the balance of risks upwards. E-commerce and digital
technologies will likely be the bright spots in India's recovery in a
world in which there will be rebounds for sure, but pre-pandemic levels
of output and employment are a long way off."
"Japanification stares at much of the advanced world, while for emerging economies, potential output will be a lot flatter."
As
per the bulletin, recent shifts in the macroeconomic landscape have
brightened the outlook, with the GDP in striking distance of attaining
positive territory and inflation easing closer to the target.
"If
these movements sustain, policy space could open up to further support
the recovery. Merchandise trade has rebounded in early January,
attesting the slow healing of domestic demand and the unlocking of
export energies. Current account surpluses are ebbing as domestic
activity regains vigour. Foreign investment flows are already scenting
the imminent upturn."
"The recent new highs scaled by equity
markets are driven by optimism around early Q3 corporate earnings
results, with IT majors including Tata Consultancy Services, Infosys and
Wipro recording strong growth."
In addition, the bulletin called
for the need to kickstart investment is acquiring urgency to secure a
durable turnaround and a sustainable growth trajectory.
"India
must look for ways in which cash sitting idly in balance sheets of
corporations and banks and reverse repo balances with the Reserve Bank
finds their way into credit to productive sectors and into real spending
on investment activity before it imposes a persistent deflationary
weight on real activity."
"Stress in the financial sector's
balance sheet could intensify as the camouflage of moratorium, asset
classification standstill and restructuring fades, but banks have
entered the health crisis with stronger capital buffers than the global
financial crisis."
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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