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Economic recovery has gained strength but improvement is 'uneven': RBI

Economic recovery has gained strength but improvement is 'uneven': RBI

RBI bulletin says the indicators of aggregate demand posit a brighter near-term outlook than before; global outlook remains shrouded in "uncertainty with headwinds from multiple fronts".

Manufacturing is improving in overall operating conditions, while services are in strong expansion mode, says the RBI. Photo: Reuters Manufacturing is improving in overall operating conditions, while services are in strong expansion mode, says the RBI. Photo: Reuters

The Reserve Bank of India (RBI), in its monthly bulletin, has said that the economic recovery has gained strength in India, though the speed and pace of improvement remain "uneven" across different sectors. However, the indicators of aggregate demand posit a brighter near-term outlook than before.

The central bank also said that the global economic outlook remains shrouded in "uncertainty with headwinds from multiple fronts". The RBI bulletin said the Rabi season has set in early on the back of a record Kharif harvest.

Manufacturing is improving in overall operating conditions, while services are in strong expansion mode. "Overall monetary and credit conditions stay conducive for a durable economic recovery to take root," the central bank said.

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In its analysis, the central bank said that the COVID-19 pandemic led to massive disruption in global as well as domestic economy, causing uncertainty as reflected in large swings in forecasts of growth and inflation for 2020-21.

The pandemic-led curbs also led to a downward revision in the growth forecast for 2020-21 and subsequent gradual opening led to improvement in the growth outlook.

It said the overnight money market volatility, in terms of volume-weighted rates, increased after the declaration of the pandemic and peaked in March-2020. A shift away from the unsecured segment to secured segments was also witnessed after the declaration of the COVID-19 pandemic.

The report said a study of the intraday market activity and network structure of the call money segment suggests increased portfolio diversification after the onset of the pandemic.

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