Mumbai: Tapering the second wave of Covid-19 pandemic coupled with aggressive vaccination has enlightened the short-term prospects of the Indian economy, despite a strong increase in aggregate demand may take time, the Indian reserve bank said in the economic situation.
Connecting an increase in inflation to a supply side disorder because of the pandemic and hardening of commodity prices in the international market, the RBI article argues that these factors must subside for a year because the supply side steps apply.
“Tapering from the second wave, coupled with aggressive vaccination boost, has enlightened short-term prospects for the Indian economy.” While some indicators of high frequency activity recovered, a solid increase in aggregate demand has not been formed, “said the article was written together by the Deputy Governor of RBI MD Patra and other officials.
RBI, however, said the views stated in the article were the people of the writer and It does not always represent the view of Bank India’s reserves.
On the supply side, the agricultural conditions rotate with the resurrection in the rainy season but the recovery of the manufacturing and service sector has been disturbed by the second wave.
“The economy is struggling to regain recovery momentum that starts in the second half of 2020-21.
But disturbed by the second wave.
“Pick up in inflation is driven by adverse supply shocks because of disorders caused by pandemics, including increasing margins and taxes,” he said.
There is also a special incompatibility of inventory requests such as in the case of food items rich in protein, oil and edible pulses, which are being handled by certain supply side steps, the article said.
But more needs to be done, he said, and added an increase in international commodity prices, especially crude oil, also gave push-push pressure.
These factors must make it easier for this year because the supply side steps apply.
“Next, the increase in solid aggregate demand has not been formed.
Even with 9.5 percent GDP growth in 2020-21, there will be substantial slack in the economy and demand pressure can take more time to become clear,” it’s a word.
Inflation ruled on a tolerance band during June-November 2020 and has returned to move on the top tolerance threshold in May and June 2021.
The feeling is that inflation will survive this level of increase for several months before subside in the third quarter 2021-22 when harvesting Kharif arrived at the market, he said.
Sowing for the Kharif season covered 499.9 lakh hectares (around 46 percent of the total area) on July 9, 2021.
But the progress of sow had been relatively muted – 10.4 percent lower than last year due to breakthroughs from the second wave to rural areas, hot weather leads to sagging power and breaks in the progress of the monsoon.
On July 12, the cumulative rainfall this season was seven percent below the Long period average (LPA) by opposing 13 percent above a year ago.
This is also reflected in the sale of fertilizers that remain calm until May.
The article also notes that the price of gas stations in all major Metros has exceeded Rs 100 per liter in the first half of July, with the average price (pump prices in the four main Metro) of Rs 102.92 per liter on July 12, 2021.
The price of diesel pumps is also high at Rs 93.52 per liter.
After remaining stable for the past two-three months, the price of kerosene and LPG has also been registered in July so far.