India ready for rapid economic recovery; Watch out for holiday season warrants: RBI

The RBI maintained the status quo on interest rates in its October monetary policy.

New Delhi: The Reserve Bank of India (RBI) said on Monday that the country was well placed on the path to a rapid recovery with growth impulses visibly transmitted to all sectors of the economy. In its September economic review, the central bank said: “The strategic reforms undertaken so far as well as new steps in the vaccination campaign have helped the economy to navigate the devastating waves of the pandemic. Covid-19 “.

The central bank also said: “Robust and sustained growth in agriculture, a strong rebound in manufacturing and industry, recovery in service activity, dynamic revenues and an improved fiscal position are testament to the resilience of Indian economy “.

The Reserve Bank, however, has added a word of warning for the current holiday season. “While the ebb of the second wave coupled with rapid progress in vaccination bodes well for renewed consumer confidence, the holiday season warrants caution and the continued adoption of appropriate behavior at Covid”, did he declare.

“The agricultural sector continues to strengthen rural demand due to the estimated increase in Kharif production, record purchase of wheat and paddy during Rabi’s marketing season and the current Kharif marketing season respectively.” , added the RBI.

A satisfactory monsoon also promises similar benefits in the future, he added.

The central bank stressed that “the continued decline in the growth of the currency in circulation since August is indicative of a decline in the demand for precautionary savings with a gradual reopening of the economy”.

RBI on the equity markets

“The national stock market remains dynamic with reassuring indications of global and national economic recovery. , India would have received a REIT worth $ 7.2 billion, the second highest after Brazil’s $ 9 billion, “the RBI said.

“These historic highs have spawned an uptrend in national stock markets as the record addition of new Demat accounts (to hold stocks and securities in digital form) broadens the base for equity investments in the country,” a- he added.

Relief for the automotive industry?

The Reserve Bank said auto sales will be moderate due to the shortage of semiconductor chips. Right now, auto retailers are taking huge losses as manufacturers struggle to ship their vehicles to dealerships. “Auto registrations and sales remain affected by the global shortage of semiconductor chips,” the RBI said in its report. However, she expects the post-monsoon holiday season to boost demand.

Meanwhile, the central bank maintained the status quo on interest rates in its October monetary policy. The reverse repo rate – the key interest rates at which the RBI lends money to commercial banks – has been kept at four percent, and the reverse repo rate – the rate at which the RBI borrows money. money to banks – to 3.35 percent.

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