The economic growth process which was interrupted by the first COVID–19 wave, and the stringent nationwide lockdown, may remain disrupted in FY 2021–22, the reason for the second wave and third wave of his possible risks.
The growth of the process after this situation for two successive years to restore, the process now needs a strong positive push.
As luck would have it, export growth is projected to remain floating with recovery in the global economy. Even if after factoring in the post-budget increase in allocations for larger procurement of COVID–19 vaccines, an extension of the additional food subsidy program till November 2021.
Concerning the beginning of the pandemic in early 2020 the main policy challenge the RBI has had to address is to provide enough liquidity to finance the increased government borrowing without allowing int-rates and bond yields to rise. It is continuing to face the same challenge in FY 2021–22. To deal with these challenges the RBI has held the policy repo rate at 4% and the reverse repo rate at 3.35% steady since May 2020.
Its BCI(Business Confidence Index) was increased by 90% in the July- September this FY over the first quarter is indicating the sign of improvement.
The current Business Expectations Survey (BES) survey is pointing to a recovery in business opinion post of the pandemic’s second wave. Except for the West zone, business sentiments have been enhanced for all the regions.
NCAER said, the rising movement in BCI was driven by an improvement in sentiments for all the four elements of the BCI — the economic conditions will be enhanced in the next 6 months.
Apart from that, the financial position of firms will improve in the next six months; the present investment climate is positive as compared to six months ago and the present volume of utilization is close to or above the optimal level.
Since 1991, the BES every quarter has been carried out, it is covering around 500 firms across four regions. The Business Confidence Index increased by 90% on a quarter-on-quarter and about 80% on a year-on-year.
Poonam Gupta was the director-general of NCAER, has said on the challenges faced by the Indian economy. The first one is to recover from the effect of COVID-19, the second is to sustain post-COVID-19 growth rates of at least 7-8 %.
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