RBI flags risks from Covid resurgence

HYDERABAD:  Covid resurgence carries the risk of protracted restrictions and disruptions in supply chains with consequent inflationary pressures, according to RBI. Pandemic protocols, speedier vaccination, ramping up hospitals and ancillary capacity, and remaining resolutely focused on a post-pandemic future of strong and sustainable growth of macroeconomic and financial stability is the way forward, the central bank noted in its monthly bulletin released on Monday. 

According to the banking regulator, India’s economic activity is holding up against Covid-19’s renewed onslaught. With activity indicators largely remaining resilient in March and growing beyond pre-pandemic levels, it said growth outlook is bright. 

“If the relatively conservative growth forecast of the RBI holds, India’s GDP in 2021-22 will exceed its level in the pre-pandemic year of 2019-2020,” it said adding that there will be scars, some taking longer than others to heal. 

Meanwhile, retail inflation in March edged up to 5.5% but still was within the tolerance band. Meanwhile, the central bank hasn’t ruled out upside risks to inflation due to input price pressures in manufacturing and services as evidenced from the PMI data. The WPI touching a 103-month high of 7.4% indicating a pick up in costs across farm and industrial sectors was also evident.