The annual report of the Reserve Bank of India, released on Thursday, raises optimism about the state of the national economy battered by the Covid19 pandemic. As the new financial year commenced, “pervasive despair” of the past year’s first wave, it claims, is replaced by “cautious optimism” built by the vaccination process. RBI stresses on its projection of a real GDP growth of 10.5 percent for this fiscal, the first part of which is already a washout in view of the Covid’s second wave. A scaling down of the forecast is still a possibility, given the current conditions.
On the positive side, Goods and Services Tax (GST) collections crossed the Rs 1 lakh crore mark for the seventh consecutive month and climbed to the highest level on record. This could mean the manufacturing and services sectors remain in good shape despite the adversities. Yet, several sectors of the economy are down in the dumps as in the cases of aviation, public transport, hospitality, tourism and hotels industry segments that will not gain a new life at least until the end of this year. Even after the vaccination, the fear factor could linger. The fresh damage the pandemic can inflict by its own erratic behavior also must be taken into account. The economic recovery from the pandemic’s adverse sway, RBI stresses, will critically depend on the revival of private demand by giving a “boost” to the market forces. Raising the consumption and acceleration of investment are a pre-requisite to the process of an economic recovery. The government will have its plans ready on these fronts.
The despair of the past year is clearly replaced with a sense of optimism even as the death rate from the pandemic is on the ascendant in the season of the second wave. All the same, the money circulation in the market has considerably reduced as the graph of joblessness increased and purchasing power decreased over the past one year. Only those in specific white collar sectors and government employees continue getting their full salaries. The impact on the stimulus packages announced by the Centre over the course of the past few months would need to be gauged.Overall, the sense of despondency continues. Large numbers of people across the spectrum are avoiding being in the public realm. The essential items production would not be hampered, but other sectors including even the textiles and garments sector are facing the brunt. While experts talk in technical terms, the ground realities too would need to be taken into account.
