
RBI faces fresh challenge with Covid-19 second wave
The new spurt in infections has suddenly added uncertainty to the domestic growth outlook amidst tightening of restrictions by some state governments.
The new spurt in infections has suddenly added uncertainty to the domestic growth outlook amidst tightening of restrictions by some state governments.
The recent surge in Covid-19 infections, the central bank says, adds uncertainty to the outlook on domestic growth as restrictions could dampen demand improvement and delay the return of normalcy.
Aided by strong demand recovery, credit ratio rebounds to 1.33 in H2FY21, from 0.54 in H1FY21. GDP could grow at 11% in FY22, but the resurgence in Covid-19 cases is a key downside risk, says CRISIL.
According to a BofA Securities report, the Covid-19 shock could delay India touching the GDP of Japan by three years. In their latest estimates, it will now happen by 2031 if the economy grows at 9%.
Rising inflation and firming bond yields in the U.S. push down Indian benchmark indices, causing a correction of around 6% from the latest life–highs of February 16.
As expected, the economy staged a turnaround in the third quarter of FY21 with a GDP growth figure of 0.4%. The stage is now set for a big rebound in FY22.
Finance Minister Nirmala Sitharaman’s Budget has given sufficient impetus to crucial sectors such as healthcare and infrastructure, and some opportunities to future-proof India’s growth story.
At its first monetary policy review for 2021, the central bank kept key rates unchanged, while announcing several measures to manage liquidity.
The impact of Covid-19 on the economy has been massive and the survey discusses ways to manage the economic crisis post the pandemic.
Despite the Survey’s positive tone, the Sensex and Nifty 50 closed in the red, falling nearly 8% in a matter of five trading sessions from their January 21 life–high.