RBI Bulletin: Recovery of Economy depends of Inoculation speed

RBI bulletin also said that we will have to learn to live with the virus, and there is a need to ensure that the recovery was built on solid foundation of business investment and productivity growth.

On June 16, RBI’s monthly bulletin released, it said, “India’s economic recovery will depend on the speed and scale of vaccination in the country.”

RBI said that the speed and scale of vaccination would help shape the path of recovery, and that the economy can unshackle itself from preexisting cyclical and structural hindrances. The second wave will mainly hit the domestic demand.

The COVID-19 pandemic necessitated an overwhelming fiscal response from governments across the world. RBI also mentioned how the cross-country experiences suggest that the expenditure reductions have been found to be more effective in the achievement of durable fiscal consolidation than the revenue raising measures.

RBI bulletin also said that we will have to learn to live with the virus, and there is a need to ensure that the recovery was built on solid foundation of business investment and productivity growth.

“Some firms might face closure when patterns of the demand shifts,” said RBI Bulletin.

The Bulletin mentions that while some of the industries might become permanently smaller, but the existing firms in industries experiencing increased demand may expand and new ones might emerge. It also said that what matters was that the resources were being put to their best use and that the reallocation occurred smoothly and with minimum costs as possible.

RBI said that the aggregate demand conditions grappled with lockdown like restrictions over the country.

On June 4, the monetary policy committee left the key rates unchanged after the bi-monthly policy review meeting and said the policy stance will remain accommodative as long as the necessary to review the growth in the economy.

The recent spike in inflation had alarmed the economists. The May retail inflation spiked to six month high of 6.3 per cent.

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