The Reserve Bank Of India (RBI) stated in a latest monthly update that ongoing domestic economic revival is driven by a confluence of factors, viz., release of pent-up demand, government's push for capital expenditure, robust external demand and normal monsoon. Faster resumption of contact-intensive services and speedy restoration of consumer confidence brightens near-term prospects. Going forward, the emergence of the Omicron strain has heightened the uncertainty in the global macroeconomic environment, accelerating risks to global trade with resumption of travel restrictions, quarantine rules at major ports and airports. The ongoing supply-side constraints are likely to keep input prices and freight rates at elevated levels and could act as a drag on overall exports. For the Indian economy, the recovery is spearheaded by an uptick in private investment through November-December alongside a turnaround in bank credit offtake and high capex from the government sector (Centre and States). In conjunction, the employment situation has brightened. The outlook remains upbeat, though concerns revolving around the spread of the new Omicron variant are surfacing. The 7-day moving average of daily Covid-19 cases plummeted below 9000 by the close of November.
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