CAPEX Push By Government And Rising Capacity Utilization Could Support GDP Outlook Says RBI

The Reserve Bank Of India, in its latest Annual Report, has maintained a cautious stance on local economy. It noted that the pace of contagion in the second wave has been alarming, stretching the health infrastructure in terms of the capacity to handle a surge of this size and speed. Daily new confirmed infections surpassed the peak of the first wave and crossed 1 lakh in early April, before vaulting above 4 lakh by the end of the month and then dipping to 2.2 lakh as on May 23, 2021. While in the initial stages, Maharashtra appeared to be its epicentre, the second wave engulfed other parts of the country over the next few weeks.

The onset of the second wave has triggered a raft of revisions to growth projections, with the consensus gravitating towards the Reserve Bank's projection of 10.5% for the year 2021-22 - 26.2% in Q1, 8.3% in Q2, 5.4% in Q3 and 6.2% in Q4. The pandemic itself, especially the impact and duration of the second wave, is the biggest risk to this outlook. However, upsides also stem from the capex push by the government, rising capacity utilisation and the turnaround in capital goods imports.

In the midst of the second wave as 2021-22 commences, pervasive despair is being lifted by cautious optimism built up by vaccination drives. Intense national efforts to beat back the virus are coalescing at least to some synchronicity across the world. Countries are stepping away from vaccine nationalism as the world adapts by learning to survive, the RBI stated.

Powered by Capital Market - Live News