Shaktikanta Das: Localised lockdowns can dampen pick-up in demand

The Reserve Bank of India (RBI) has retained its financial progress projection for the present monetary yr at 10.5 per cent whereas red-flagging the current surge in Covid-19 infections as a menace to the financial restoration.
“Recent surge in Covid-19 infections has created uncertainty over economic growth recovery. Focus should be on containing fresh infection spread and economic revival,” mentioned RBI Governor Shaktikanta Das even because the Monetary Policy Committee (MPC) left coverage charges unchanged.
The second wave of Covid-19 infections in India is accelerating at an unprecedented tempo with the nation turning into solely the second after the US to report over 1,00,000 recent instances in a day.
“The recent surge in infections has… imparted greater uncertainty to the outlook and needs to be closely watched, especially as localised and regional lockdowns could dampen the recent improvement in demand conditions and delay the return of normalcy,” mentioned Das.
The RBI mentioned that although the corporations engaged in manufacturing, companies and infrastructure sectors had been optimistic a couple of pick-up in demand, “consumer confidence, on the other hand, has dipped with the recent surge in Covid infections.” The RBI has projected actual GDP progress at 26.2 per cent within the April-June quarter; 8.3 per cent for July-September; 5.4 per cent in October-December; and 6.2 per cent in January-March 2022.

The National Statistical Office (NSO) in its replace on February 26, 2021 positioned the contraction in actual GDP at 8.0 per cent for 2020-21.
As for inflation, RBI projected shopper value inflation index to be inside its higher tolerance restrict of 6 per cent. It mentioned that bumper meals grains manufacturing will soften cereal costs though there are “some underlying constituents” testing the higher tolerance degree.
The central financial institution has projected retail inflation at 5.2 per cent for the primary and second quarters of this fiscal yr; 4.4 per cent within the third and 5.1 per cent within the final quarter.

The meals inflation trajectory will critically rely on the temporal and spatial progress of the south-west monsoon in its 2021 season, Das mentioned.
Further, he famous that some respite from the incidence of home taxes on petroleum merchandise by coordinated motion by the Centre and states may present reduction on high of the current easing of worldwide crude costs.