Economy has come out of pandemic and recovery getting stronger: RBI

In its January bulletin, the RBI has said that the economy has come out of the pandemic crisis and the recovery was getting stronger. Additionally, it said that the vaccination drive against the pandemic had brought in a new optimism and barring the visitation of another wave, the worst is behind us.

Quoting William Shakespeare to describe the state of the economy, the central bank said, “Recent high-frequency indicators suggest that the recovery is getting stronger in its traction and soon the winter of our discontent will be made glorious summer.”

“Shifts in the macroeconomic landscape have brightened the outlook, with GDP (gross domestic product) within 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,” it added.

India is opening up faster than other countries, with large states witnessing near normalcy in activities. “Domestic trading activity, as reflected in the issuance of e-way bills, expanded at a brisk pace, even over a high base, posting growth of 15.9 per cent year-on-year (YoY) – intra-state by 17.3 per cent and inter-state by 13.8 per cent,” the bank said.

“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,” the RBI added.

The report said that domestic spending was normalising rapidly, while goods and services tax (GST) collection surged to an all-time high of
Rs 1.15 trillion in December higher by 11.6 per cent over a year ago.