ECONOMY NOT AS HARD HIT AS FIRST WAVE, REVIVAL OF DEMAND KEY FOR RECOVERY: RBI

India’s economy has not moderated as much as it did during the first wave of the coronavirus, but uncertainties may act as a short-term deterrent and private demand will be key to revival, the Reserve Bank of India said on Thursday.

In its annual report, the central bank said the country’s growth prospects now essentially depend on how fast India can arrest its second wave of Covid-19 infections.

“For a self-sustaining GDP [gross domestic product] growth trajectory post-covid-19, a durable revival in private consumption and investment demand together would be critical as they account for around 85% of GDP,” RBI said.

RBI said central and state government deficits could rise when revised estimates are released and high levels of deficit and debt could pose challenges in financing once private investment picks up.

It said its balance sheet increased by 6.99% in FY21 to ₹57.08 trillion, mainly reflecting its liquidity and foreign exchange operations. NEW DELHI: