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RBI Report: Indian Economy activity strong despite rising omicron

The Reserve Bank of India (RBI) stated in its January 2022 bulletin that India’s overall economic activity remained solid, owing to rising consumer confidence and bank credit growth, as well as hopes that Omicron will be a “flash flood rather than a wave,” brightening the outlook.

“India has achieved remarkable progress in the field of immunisation. Recent data from the United Kingdom and South Africa reveal that Omicron variant infections are 66 to 80% less severe, with a decreased requirement for hospitalisation, “According to an article on the status of the economy published in the RBI Bulletin.

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Aggregate demand conditions remain resilient with rising consumer and business confidence and an increase in bank credit, while rabi sowing has above last year’s level and normal acreage, according to the report.

According to the research, overall economic activity in India remains strong, with positive consumer and business optimism and increases in key incoming high-frequency indicators. It also stated that manufacturing and other types of services are still growing.

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“Expectations that Omicron would be more of a flash flood than a wave has improved near-term prospects,” the report added.

The opinions stated in the article are those of the authors and do not necessarily reflect those of the RBI, according to the central bank.

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Although the fading of inflation may take longer, there are signs that supply chain disruptions and transportation costs are progressively lessening. According to the report, this presents a window of opportunity to focus all energy on accelerating and expanding global recovery.

Data for early January 2022 (up to January 12) shows a rise in digital payments, while the recent surge in infections “may represent a worry moving forward,” according to the report. Despite this, the payment sector is projected to remain resilient due to the variety of checkout choices and the rise of digital.

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