The central bank’s monthly bulletin for December said more evidence has surfaced since the last bulletin showing the Indian economy is emerging from the slowdown caused by Covid.
“Since the assessment presented in last month’s article, there has been more evidence showing that the Indian economy is pulling out of the depths of Covid-19 and re-inflating at a pace that beats most predictions,” it said.
It found that economic conditions continued to improve through November 2020 due to the boom in agriculture and manufacturing.
In the June-September quarter, Indian GDP declined by (-) 7.5 percent year-on-year, compared to (-) 23.9 percent in the previous quarter.
In its last monetary policy meeting, the RBI revised the forecast of real GDP growth for fiscal year 21 to (-) 7.5 percent faster recovery after narrowing the GDP decline for July-September, along with hopes for Covid-19 vaccines.
It was an upward revision from the earlier estimate of (-) 9.5 percent. Publish the last MPC meeting, RBI Governor Shaktikanta That had said that third quarter growth of the current budget will enter a positive zone, with the forecast that GDP will grow 0.1 percent and growth will further improve to 0.7 percent in the fourth quarter.
In its December bulletin, the RBI also said the financial terms included in interest rates may be easiest in decades. Despite the headwinds, the unwavering efforts of everyone involved could put India on a faster growth path, he added.
According to the bulletin, states in all regions saw a sharp decline in economic activity in April after announcing a nationwide lockdown. As a result, the Coincident Index of all regions showed a recovery, albeit with temporary downward movements.
A Coincident Index (CI) with daily high-frequency variables helps to capture the dynamics of economic activity at the state level in the country. CI consists of four indicators that represent a mix of demand and supply dynamics and are based on the daily availability of data at the country level – total vehicle registrations, power consumption, air quality index, mobility data from Google and Apple.
According to CIs, the northern region rebounded the most in June, followed by positive momentum in July, while the western states of Gujarat and Maharashtra The slowest recovery was extended to the end of July and the first week of August.
In particular, CIs for states in various regions saw a strong upswing in October. Although there was some moderation in the first half of November, momentum remained positive in most countries and picked up in the second half of the year.
The bulletin found that CI has a positive and statistically significant relationship with industrial production growth.