RBI Bulletin: Economic activity in India remains strong; Inflation continues to play a spoilsport

18 Jan 2022 , 11:55 AM

The Reserve Bank of India (RBI) in its monthly bulletin for January 2022, announced that the overall economic activity in India is strong on the back of upticks in various indicators. However, the central bank continues to see inflation as the spoilsport going forward.

In its ‘State of the Economy’ section, RBI said that “overall  economic activity in India remains strong, with upbeat consumer and business confidence and upticks in several incoming high frequency indicators.”

On the vaccination front, RBI said that, ” India has made rapid strides. On the Omicron variant, the recent data from the UK and South Africa suggest that such infections are 66 to 80 per cent less severe, with a lower need for hospitalisation.”

“This has brightened near-term prospects and financial markets reflect this optimism,” RBI added.

Further, RBI highlighted that “alongside, monetary and credit conditions are improving with bank credit picking up in a gradual but sustained manner. India’s digital payment ecosystem is also expanding rapidly.”

In contrast, RBI said that “the global outlook remains clouded by considerable uncertainty. Inflation continues to mount across geographies amidst disruptions in production, supply chains and transportation.”

“Consequently, the divergence between monetary policy stances across jurisdictions has widened. There are indications that supply chain disruptions and shipping costs are slowly easing, although the waning of inflation may take longer,” RBI added.

“This provides a window of opportunity to focus all energies on accelerating and broadening the global recovery,” RBI concluded lastly.