MUMBAI: The ongoing third wave of Covid has resulted in "some loss of momentum in economic activity," as seen in high frequency indicators, according to Reserve Bank of India (RBI) Shaktikanta Das. He also mentioned that demand for services that need a lot of touch is still low.
"The MPC noted the potential adverse risks to economic activity from the highly contagious Omicron strain," Das said in his policy statement following the Monetary Policy Committee's bi-monthly meeting. Reassuringly, the symptoms have stayed modest, and the rate of infection is slowing down as quickly as it has accelerated.
"However, high frequency indicators such as purchasing managers' indexes for both manufacturing and services, completed steel consumption, and sales of tractors, two-wheelers, and passenger vehicles show a loss of momentum in economic activity." Encouraging 'Rabi' prospects, healthy export demand, accommodative monetary and liquidity conditions, rising credit offtake, and the ongoing push on capital investment and infrastructure in the Union Budget 2022-23, he said, are all positive signals for quickening the pace of recovery.
In addition, Das stated that India's GDP will increase at a rate of 7.8% in FY2022-23. As a result, real GDP growth is expected to be 17.2 percent in Q1FY23, 7% in Q2, 4.3 percent in Q3, and 4.5 percent in Q4.
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