Mumbai, 18 January. India’s overall economic activity remains strong, driven by upbeat consumer confidence and growth in bank credit, and expectations that Omicron may turn out to be a “flash flood rather than a wave” have further brightened the prospects, according to an RBI article.
On the vaccination front, India has made rapid progress. On the Omicron variant, recent data from the UK and South Africa shows such infections are 66 to 80 per cent less severe, with less need for hospitalisation, the article on the state of economy published in the RBI Bulletin.
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It noted that amid pick-up in consumer and business confidence and bank credit, aggregate demand conditions remain resilient, while on the supply front, rabi sowing has exceeded last year’s level and normal acreage.
Noting that manufacturing and several categories of services remain in expansion, the article said, “Overall economic activity in India remains strong, with buoyant consumer and business confidence and an increase in several incoming high-frequency indicators”. “Expectations that Omicron may turn out to be more of a flash flood than a wave has brightened near-term prospects,” it added.
There are signs that supply chain disruptions and shipping costs are gradually easing, although the waning of inflation may take longer. This provides an opportunity to focus all energies on accelerating and broadening global recovery, the article said.
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It also said that figures for early January 2022 (as of January 12) indicate an increase in digital payments, although the recent surge in infections “could be a concern going forward”. Nevertheless, the payment industry is expected to exhibit resilience owing to the availability of various checkout options and growing digital.
The market estimates that the value of digital payments could triple from $300 billion in 2020-21 to $1 trillion by 2025-26.
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