RBI: RECOVERY GATHERING PACE, MORE ROOM LIKELY FOR FISCAL SUPPORT
India’s economic recovery is strengthening and policymakers may soon have more room for steps to support the revival, an article published in the Reserve Bank of India’s January bulletin said, citing the improvement in high-frequency data.
“Recent shifts in the macroeconomic landscape have brightened the outlook, with GDP [gross domestic product] in striking distance of attaining positive territory and inflation easing closer to the target. If these movements sustain, policy space could open up to further support the recovery,” it said.
The central bank cut policy rates last year to support the recovery ,but has left rates unchanged in the recent months due to rising inflation.
The article said the number of e-way bills issued in December 2020 was the highest ever, “suggesting that the recovery is no longer aloft on the fleeting tailwinds of festival spending but is rising Phoenix-like on the wings of an intrinsic momentum”.
The Indian economy shrank 23.9% in the first quarter and 7.5% in the second quarter on account of the Covid-19 pandemic. The RBI expects the economy to contract by 7.5% in the current fiscal to March.
An early revival in investments will be critical to secure a durable turnaround, it said.→p15
MUMBAI:
The BSE Sensex index vaulted past the 50,000 mark for the first time, capping a phenomenal run that lifted the stock markets to a record amid a deadly pandemic.
The benchmark index climbed as much as 0.7% to 50,184 in intra-day trading on Thursday, almost doubling from its March 23 nadir. The index broke through 50,000 with a gap-up opening in the morning, and stayed above the mark for most of the day, before giving up the gains. The Sensex closed at 49,624.76.
The remarkable stocks’ rally was seeded in March as local investors started buying the panic, although few could have predicted then that the rebound would be so sharp and
MUMBAI:
so soon. As central banks around the world adopted expansionary monetary policies to support their economies, foreign liquidity flowed into Indian stock markets, driving the unprecedented boom.
The surge in equity prices was also fuelled by a swifterthan-expected economic recovery,