State of the Economy:
– The liquidity in the system remained in surplus.
o Repo rate was maintained at 4 per cent in 2021-22.
o RBI undertook various measures such as G-Sec Acquisition Programme and Special Long-Term Repo Operations to provide further liquidity.
– The economic shock of the pandemic has been weathered well by the commercial banking system:
o YoY Bank credit growth accelerated gradually in 2021-22 from 5.3 per cent in April 2021 to 9.2 per cent as on 31st December 2021.
o The Gross Non-Performing Advances ratio of Scheduled Commercial Banks (SCBs) declined from 11.2 per cent at the end of 2017-18 to 6.9 per cent at the end of September, 2021.
o Net Non-Performing Advances ratio declined from 6 percent to 2.2 per cent during the same period.
o Capital to risk-weighted asset ratio of SCBs continued to increase from 13 per cent in 2013-14 to 16.54 per cent at the end of September 2021.
o The Return on Assets and Return on Equity for Public Sector Banks continued to be positive for the period ending September 2021.
– Exceptional year for the capital markets:
o Rs. 89,066 crore was raised via 75 Initial Public Offering (IPO) issues in April-November 2021, which is much higher than in any year in the last decade.
o Sensex and Nifty scaled up to touch peak at 61,766 and 18,477 on October 18, 2021.
o Among major emerging market economies, Indian markets outperformed peers in April-December 2021.
Prices and Inflation:
– The average headline CPI-Combined inflation moderated to 5.2 per cent in 2021-22 (April-December) from 6.6 per cent in the corresponding period of 2020-21.
o The decline in retail inflation was led by easing of food inflation.
o Food inflation averaged at a low of 2.9 per cent in 2021-22 (April to December) as against 9.1 per cent in the corresponding period last year.
o Effective supply-side management kept prices of most essential commodities under control during the year.
o Proactive measures were taken to contain the price rise in pulses and edible oils.
o Reduction in central excise and subsequent cuts in Value Added Tax by most States helped ease petrol and diesel prices.
– Wholesale inflation based on Wholesale Price Index (WPI) rose to 12.5 per cent during 2021-22 (April to December).
o This has been attributed to:
ï‚§ Low base in the previous year,
ï‚§ Pick-up in economic activity,
ï‚§ Sharp increase in international prices of crude oil and other imported inputs, and
ï‚§ High freight costs.
– Divergence between CPI-C and WPI Inflation:
o The divergence peaked to 9.6 percentage points in May 2020.
o However, this year there was a reversal in divergence with retail inflation falling below wholesale inflation by 8.0 percentage points in December 2021.
o This divergence can be explained by factors such as:
ï‚§ Variations due to base effect,
ï‚§ Difference in scope and coverage of the two indices,
ï‚§ Price collections,
ï‚§ Items covered,
ï‚§ Difference in commodity weights, and
ï‚§ WPI being more sensitive to cost-push inflation led by imported inputs.
o With the gradual waning of base effect in WPI, the divergence in CPI-C and WPI is also expected to narrow down.
Sustainable Development and Climate Change:
Social Infrastructure and Employment:
– 157.94 crore doses of COVID-19 vaccines administered as on 16th January 2022; 91.39 crore first dose and 66.05 crore second dose.
-ï‚ With revival of economy, employment indicators bounced back to pre-pandemic levels during last quarter of 2020-21.
-ï‚ As per the quarterly Periodic Labour Force Survey (PFLS) data up to March 2021, employment in urban sector affected by pandemic has recovered almost to the pre-pandemic level.
-ï‚ According to Employees Provident Fund Organisation (EPFO) data, formalization of jobs continued during second COVID wave; adverse impact of COVID on formalization of jobs much lower than during the first COVID wave.
-ï‚ Expenditure on social services (health, education and others) by Centre and States as a proportion of GDP increased from 6.2 % in 2014-15 to 8.6% in 2021-22 (BE)
-ï‚ As per the National Family Health Survey-5:
o Total Fertility Rate (TFR) came down to 2 in 2019-21 from 2.2 in 2015-16
o Infant Mortality Rate (IMR), under-five mortality rate and institutional births have improved in 2019-21 over year 2015-16
-ï‚ Under Jal Jeevan Mission (JJM), 83 districts have become ‘Har Ghar Jal’ districts.
– Increased allotment of funds to Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) to provide buffer for unorganized labour in rural areas during the pandemic.
Source: PIB
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