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 Phoenixlike 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.
NEW DELHI: Hero MotoCorp Ltd, India’s largest two-wheeler maker, expects the current momentum in demand in the rural market to continue in FY22, riding on hopes of further measures to boost rural income in the upcoming Budget.
These measures are expected to boost the sales of Hero’s entrylevel motorcycles in the coming fiscal, said Pawan Munjal, chairman, Hero MotoCorp on Thursday. Sales of Hero’s entry-level motorcycles surged post removal of lockdown on the back of faster recovery in demand in rural areas and increased preference for personal mobility. It raised production to 806,848 units in October compared to 599,248 in October 2019, expecting a robust recovery in demand during the festival season.
“I think the momentum in rural demand will continue and from this budget I expect continued focus on the rural economy and agri sector from the government, which they did during the pandemic. This has an impact on our sales since a significant chunk came from the rural market. I do see the government focusing on the rural markets,” Munjal said in an interaction.
“In our country, we have a large pool of prospective customers who can be brought into this fold of entry-level products. That is something we will never lose track of,” he added.
Hero will, however, focus on premium products in both motorcycles and scooters to improve its market share and operating margins, eyeing an entry into the middle-weight segment that is currently dominated by Royal Enfield. A new product is under development at its R&D centre in Jaipur.
According to Munjal, nearly two-thirds of the new products will be in the premium segment and the company has also changed its strategy to improve its exports, especially to Africa and Latin America.
“Our direction is very clear due to recent product introductions. From 150cc we moved to 180cc and 200cc, and the progress will go on in the middle-weight where product development is going on. We are also learning from our rally bikes,” he said. “The way we are going in the premium segment, we are clearly targeting the middleweight segment.”