"Soon the winter of our discontent will be made glorious summer," the RBI said in its January Bulletin.

 

"Cross-country comparison indicates that India is on the move, ahead of other economies."

 

It said the six largest states - Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka, Gujarat and West Bengal - recorded 87 per cent of normal footfalls in public places, the best levels so far in the pandemic.

 

"Domestic trading activity as reflected in issuance of E-way bills expanded at a brisk pace, even over a high base, posting a growth of 15.9 per cent y-o-y - intra-state by 17.3 per cent and inter-state by 13.8 per cent."

 

"In fact, the number of E-way bills issued during December 2020 was the highest, 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."

 

Besides, it said that aggregate demand conditions has either consolidated recent gains or vaulted up on strengthening pace in December 2020.

 

"Electricity consumption expanded at 5.0 per cent y-o-y, maintaining its growth for the fourth successive month."

 

"Northern and central states such as Madhya Pradesh (15 per cent), Rajasthan (12 per cent), Bihar (14 per cent), Punjab (12 per cent) and Uttar Pradesh (10 per cent) experienced a surge in power demand in December due to increased heating load."

 

According to the bulletin, financial markets remain ebullient with EMEs receiving strong portfolio inflows and India on track for receiving record annual inflows of foreign direct investments.

 

It pointed out: "What will 2021 look like? The shape of the recovery will be v-shaped after all and the 'v' stands for vaccine."

 

On January 16, India launched the biggest vaccination drive in the world, backed by its comparative advantage of having the largest vaccine manufacturing capacity in the world and a rich experience of mass inoculation drives against polio and measles.

 

"If successful, it will tilt the balance of risks upwards. E-commerce and digital technologies will likely be the bright spots in India's recovery in a world in which there will be rebounds for sure, but pre-pandemic levels of output and employment are  a long way off."

 

"Japanification stares at much of the advanced world, while for emerging economies, potential output will be a lot flatter."

 

As per the bulletin, recent shifts in the macroeconomic landscape have brightened the outlook, with the GDP 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. Merchandise trade has rebounded in early January, attesting the slow healing of domestic demand and the unlocking of export energies. Current account surpluses are ebbing as domestic activity regains vigour. Foreign investment flows are already scenting the imminent upturn."

 

"The recent new highs scaled by equity markets are driven by optimism around early Q3 corporate earnings results, with IT majors including Tata Consultancy Services, Infosys and Wipro recording strong growth."

 

In addition, the bulletin called for the need to kickstart investment is acquiring urgency to secure a durable turnaround and a sustainable growth trajectory.

 

"India must look for ways in which cash sitting idly in balance sheets of corporations and banks and reverse repo balances with the Reserve Bank finds their way into credit to productive sectors and into real spending on investment activity before it imposes a persistent deflationary weight on real activity."

 

"Stress in the financial sector's balance sheet could intensify as the camouflage of moratorium, asset classification standstill and restructuring fades, but banks have entered the health crisis with stronger capital buffers than the global financial crisis."