Time to widen the policy focus

The dislocation caused by the pandemic will continue to influence economic outcomes in the new financial year. While rising cases of Covid-19 in different parts of the world suggest that the pandemic still remains a risk, the Indian policy establishment will have to deal with additional challenges over the coming quarters. 

The first big policy test of the new financial year will be the monetary policy review next week. The economic outlook has changed materially since the last meeting of the Monetary Policy Committee (MPC) in February. The MPC will inevitably need to review its inflation projections for the new fiscal