Severe shock to consumption, economy will take longer to recover: RBI

"Retrenchment in activity that is unprecedented in history," says the annual report released by the central bank

The contraction in economic activity will likely prolong as states have re-imposed stricter lockdown, said the Annual Report of the Reserve Bank of India (RBI), released on Tuesday. It is important to withdraw the stimulus once the cure to Covid-19 is found, the report added.

High-frequency indicators so far pointed to a “retrenchment in activity that is unprecedented in history”, the report said, adding, “the upticks that became visible in May and June after the lockdown was eased in several parts of the country, appear to have lost strength in July and August, mainly due to re-imposition or stricter imposition