India poised to re-emerge as fastest growing economies, says

India poised to re-emerge as fastest growing economies, says

The Reserve Bank of India (RBI) said aggregate demand in the economy is improving and overall monetary and credit conditions are conducive for a sustainable economic recovery, while the quality of government spending has seen an improvement in the second half. In its ‘State of the Economy’ report released on Monday.

“Backed by decade low interest rates, moderation in inflation and a modest current account surplus, the Indian economy is set to regain ground lost by the pandemic and re-emerge as the world’s fastest-growing country,” the report said. ready for.” Published as a part of RBI’s monthly bulletin for November.

“Indicators of aggregate demand show a brighter near-term outlook than previously thought,” the report said. “Mobility is improving rapidly, the job market is improving and overall economic activity is on the verge of a strong revival.”

The report was optimistic about India’s prospects in the coming days, while the global economic situation remained uncertain amid risks of rapid policy normalization by major central banks, tightening financial conditions and dampening growth impulses.

“The Indian economy is clearly isolating itself from the global situation, which is affected by supply disruptions, stubborn inflation and escalation of infections in different parts of the world,” it said.

High-frequency indicators suggest that recovery is gaining momentum in many areas, “though some others are still lagging behind.”

Mobility indicators have risen, with a gradual rise in confidence, “the job market is showing signs of enthusiasm behind a spurt in business optimism and the rapid pace of vaccination.”

Exports are recovering slowly, while collections under the Goods and Services Tax (GST) have remained strong.

However, the pace and pace of recovery in the domestic economy across sectors remains uneven. There has been a record production of Kharif, while the start of the Rabi season has been positive.

Manufacturing is showing improvement in overall operating conditions, while services are in strong expansion mode, it said.

Still, the domestic outlook “remains in line with the future course of the pandemic and global supply disruptions,” even as a decline in fresh infections and rapid progress in vaccination have been encouraging.

The report also noted that the quality of government expenditure has improved, “The revenue expenditure to capital outlay ratio (RECO) has shown a significant improvement in the second half of 2021-22 relative to its trend level.”

States’ capital expenditure “increased during April-August, driven by impressive growth in tax revenues.”

With the release of GST Compensation Cess of Rs 44,000 crore, the revenue position of the states will improve further. With this, the government has transferred the entire Rs 1.59 trillion to the states on a back to back loan basis without resorting to additional borrowing from the market.

The RBI said the total GST compensation to states is expected to be around ₹2.59 trillion in 2021-22.

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