The article written by RBI officials noted that the global economy is facing formidable headwinds from the conflict in Ukraine. Oil prices had reached multi-year highs, financial markets are on edge, driven by massive purchases of safe-haven assets, especially gold.

Despite the geopolitical crisis created by the ongoing conflict between Russia and Ukraine, India is making steady progress as it recovers from the third wave of the pandemic, although downside risks remain, the Reserve Bank said in an article on Thursday.

The RBI Bulletin article on ‘State of the Economy’ states that India’s macroeconomic fundamentals remain strong and that “unfolding global developments nevertheless pose downside risks in terms of spillovers.” It went on to say that the ongoing geopolitical crisis has added to the uncertainty that is clouding the global macroeconomic and financial landscape, even as the global economy struggles to recover from the pandemic.

Spiraling oil and gas prices and volatile financial market conditions are creating new headwinds for the still incomplete global recovery, it said, adding: “Amid these difficult times, India is making steady progress on the domestic front as it recovers from the third wave.” The Reserve Bank said the views expressed in the article are those of the authors and do not necessarily represent the views of the Central Bank.

The article written by RBI officials noted that the global economy is facing formidable headwinds from the conflict in Ukraine. Oil prices had reached multi-year highs, financial markets are on edge, driven by massive purchases of safe-haven assets, especially gold.

“Amid such turbulence, the global growth outlook is deteriorating with heightened inflation and financial instability risks,” it said.
“Unless there is a swift resolution to the ongoing conflict, the crisis could have adverse effects on the global recovery, requiring downward revisions to global growth for 2022 and beyond,” the article said.

Inflation continued to rise in all economies, with cost pressures mounting against a backdrop of congested supply chains, high energy, food and commodity prices and seeping wage pressures, it said.

On the domestic front, the article noted that service outlets such as restaurants and movie theaters are gradually resuming normal operations, and mobility indicators show significant improvement in March 2022 compared to a year ago.

“With the improvement in mobility and the opening of outlets in the service sector, electricity production picked up in March and surpassed the levels of the previous month and also pre-pandemic levels,” it said.

The generation of e-waybills also remained above pre-pandemic levels. Tolls also rose in February 2022, despite the declining base effect.
The article went on to say that the resumption of mobility boosted diesel and gasoline consumption in February 2022, although a dip in Aviation Turbine Fuel (ATF) dampened overall petroleum consumption.

Retail sales of cars continued to stagnate, with high delivery times hampering registration.
It also pointed out that the gross budget deficit plummeted to an all-time low of 58.9 percent of the revised budget estimate (RE) in April-January 2021-22.

Furthermore, the total purchase of rice during the current kharif marketing season 2021-22, as on March 8, 2022, was 489.2 lakh tons cumulative, from 451.9 lakh tons a year ago. The target for rice purchase in this full season is 528.3 lakh tons.

February’s goods exports crossed the $30 billion mark for the 12th consecutive month and the $400 billion target appears within reach, it said.


This post India makes steady progress despite global crisis: RBI was original published at “https://www.financialexpress.com/economy/india-making-steady-progress-global-crisis-notwithstanding-rbi/2464285/”

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