The Reserve Bank of India (RBI) has said that although demand has recovered after the easing of lockdowns and the decline in coronavirus infections, political support will still be needed in the long term for a sustained economic recovery.
The central bank in its October 2021 monthly bulletin said premature tightening is likely to lead to stagflation, which could dampen growth as the economy recovers from the shocks of the pandemic.
Earlier this month, the RBI kept key interest rates unchanged and stressed the need to gradually release coronavirus-related stimulus measures, which would help economic growth.
Perhaps the need of the hour is not to focus “so resolutely” on standardization but on supply-side reforms to alleviate bottlenecks, labor shortages and shortages. high commodity prices, especially crude oil, he noted.
India’s economy had shown growth in the April-June quarter of the current fiscal year despite the deadly second wave of the pandemic ravaging the country around that time. This growth is mainly attributable to improved manufacturing activities and increased consumer spending.
RBI said the semiconductor shortage across the world, rising commodity prices and rising input costs are downside risks to the national growth outlook. Rising prices for edible oils are also of concern, he noted.