With activities reviving, optimism about a positive turn to the badly hit national economy is high. RBI has reinforced this optimism with a statement that the Indian economy is recovering at a pace higher than most predictions since the outbreak of the Covid-19 pandemic. Its monthly bulletin for December says the recent weeks have raised the level of optimism about a significant recovery for the economy. This was only to be expected in the emerging circumstances.
While all segments of life had been paralysed for months since March, the positive vibes began being felt only in the recent months. Overall, the nation is now in a position to cope with the pandemic’s presence. The arrival of the vaccine shortly will strengthen this optimism.
Admittedly, new threats are emerging on the Covid-19 front, resulting in imposition of night curfews in several cities in the western and northern sectors, as also Bengaluru in the south. Yet, economic activities have regained pace across the board. The exceptions are those like the aviation and hospitality sectors. Road communications have been restored and there is partial restoration of train services. Freight movement now remains unhindered. Factories are in working mode and agricultural activities have regained normal pace. There, though, are limits on the money spent for festivals due to restrictions on public engagements.
RBI recently revised the real GDP growth projection for fiscal year 2021 upwards to minus 7.5 per cent – up from the previous projection of minus 9.5 per cent. The month of November has been better and so is December. RBI expects growth to enter the positive (above zero) zone by October next, the third quarter of the next fiscal. Faster recovery thereafter is possible also as large sections of the people would be vaccinated by then and a return to near-normal life likely. This is on condition that new and harsher strains of Covid-19 would not surface and play havoc with life yet again. With the world getting more and more inter-connected other than in the present situation, chances of more virus invasions and unpredictable health risks could only be anticipated.
RBI is optimistic that, although headwinds blow, steadfast efforts by all sides could put India on a faster growth trajectory. Based also on the demand-supply dynamics and related factors, RBI noted that the western sector including Gujarat and Maharashtra registered the worst economic downturn up until August. But there was a sharp upturn in such activities across regions since October. The scenario further improved in the past two months. This is a welcome sign.