With the vaccination drive picking up pace and COVID-19 mortality rate coming down, it is time for India to embark on a new trajectory of sustainable and inclusive growth, said a Reserve Bank article on the 'State of Economy'.
Domestic demand is gaining strength while aggregate supply conditions are recouping, powered by the robust performance of kharif agricultural production and revival of manufacturing and services, said the article authored by a team of RBI officials led by Deputy Governor M D Patra.
“Amidst an accentuation of global risks, the Indian economy is picking up steam, although the recovery is uneven and trudging through soft patches. The step-up in vaccination, the slump in new cases/mortality rates and normalising mobility has rebuilt confidence,” it noted.
It added that softer than expected food prices have eased headline inflation into a closer alignment with the Reserve Bank target.
Observing that India will need policies that channel energies to regain the demographic dividend, the article said "we can do it - recent outlook upgrades cite India's strong fundamentals, the receding risks of a negative feedback between the real economy and the financial system, high capital cushions and ample liquidity."
"The time is right for setting India on a new trajectory of sustainable and inclusive growth. After all, October marks the ending and beginning of things, a symphony of permanence and change," it said.
It made a disclaimer that the views expressed in the article are those of the authors and do not necessarily represent the views of the Reserve Bank of India (RBI).
The article also made a case for longer policy support for a sustained and inclusive recovery, saying the choice of policy mix would need careful consideration and sensitivity "as it is expected that employment may weigh on the recovery, with people having lost incomes and jobs, and those that have jobs have lost purchasing power."
It further said the hiring prospects are brightening ahead of the festivals, with entry-level hiring growing at the fastest pace.
The IT sector is the leader in terms of the intent to hire, followed by education services, healthcare and pharmaceuticals.
(With PTI Inputs)