Second wave has hit domestic demand, write bank officials
The speed and scale of vaccination against COVID-19 will shape the path of recovery of the economy, which has the resilience and the fundamentals to bounce back from the pandemic and unshackle itself from pre-existing cyclical and structural hindrances, according to an RBI bulletin article.
As per the current assessment, the second wave of the pandemic has mainly hit domestic demand, Reserve Bank of India Deputy Governor M.D. Patra and other central bank officials wrote in the article on ‘State of the Economy’.
‘Ramping up healthcare’
Observing that vaccines by themselves would not end the pandemic, they said, “we have to learn to live with the virus, complementing vaccines with ramping up investment in healthcare, logistics and research. The pandemic is a real shock with real consequences. Hence, there is a need to ensure that the recovery is built on a solid foundation of business investment and productivity growth.”
The economy continued to wrestle with the second wave, though cautious optimism was returning, they opined.
The central bank said views expressed in the article were those of the authors and did not necessarily represent those of the RBI.
On the brighter side several aspects of aggregate supply conditions — agriculture and contactless services were holding up, while industrial production and exports had surged amidst pandemic protocols, they said.
“Going forward, the speed and scale of vaccination will shape the path of recovery. The economy has the resilience and the fundamentals to bounce back from the pandemic and unshackle itself from pre-existing cyclical and structural hindrances,” the article’s authors wrote.
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