The Reserve Bank of India (RBI) on Wednesday said that domestic macroeconomic conditions are striking a path that is diverging from global developments and the recovery in economic activity is gaining strength and traction as the country emerges from the third wave of the pandemic.
In its monthly bulletin for the month of February, the central bank said that manufacturing and services remain in expansion with optimism on demand parameters and uptick in consumer and business confidence.
"As businesses return to a new normal, the job landscape is expected to improve," the bulletin, issued by the Department of Economic and Policy Research of RBI, said.
Better planning and strategy, management of supply chain logistics and accelerated digitalisation helped firms mitigate pandemic risks during the third wave, it said, adding that unlike in the first two waves, overall consumer and business confidence stayed resilient on the back of the accelerated pace of vaccination, better prospects on the general economic situation, household incomes and spending.
"In February 2022, mobility indicators have recovered to pre-pandemic levels while unemployment dropped. As businesses return to new normal, hiring activities have gained traction -- several Indian firms, global giants and start-ups have announced massive hiring plans for India," the bulletin said.
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Besides, buoyant revenue collections under the goods and services tax (GST), robust toll collections and e-way bill generations are all reflective of the ongoing revival.
India's merchandise exports also registered a robust expansion of 23.7 per cent year-on-year (y-o-y) at $34.1 billion in January 2022, the bulletin said. On agriculture sector, it said that the overall acreage under rabi crops touched a new record of 700.8 lakh hectares, which is 1.5 per cent above the previous year's acreage and 8.2 per cent above the normal (5-year average) acreage, as of February 4.
The corporate earnings results of 1,273 listed non-financial companies, representing 80 per cent of market capitalisation of all listed non-financial companies, show double-digit y-o-y sales growth during the third quarter of 2021-22, the RBI said.
The global macroeconomic situation remains embroiled in a heightened state of uncertainty, with risks tilted to the downside. With inflation rising globally and central banks rushing to tighten monetary policy, investor sentiment has been dampened by risk aversion, which could unsettle capital flows and impede the embryonic recovery going forward, the report said.
However, with inflation projected to stay within the tolerance band in 2022-23 in India, the Monetary Policy Committee (MPC) of RBI decided to pause and persevere with an accommodative policy stance. RBI Governor Shaktikanta Das emphasised that monetary policy would continue in its endeavour to achieve price stability, while ensuring a strong and sustained economic recovery.
"The Union Budget 2022-23 and the monetary policy announcement of February 10, 2022 have set the tone for a durable and broad-based revival. The renewed emphasis on public investment through infrastructure development is expected to crowd-in private investment and strengthen job creation and demand in 2022-23," the bulletin said. It said that the GatiShakti national master plan, which aims to achieve inclusive growth through multi-modal connectivity and logistics efficiency, is fundamental to this infrastructure boost.
"Higher spending and ease of doing business have brightened the outlook. India has once again emerged as the fastest growing economy among the major economies of the world according to the IMF," the bulletin concluded.
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