The latest activity data suggest that India's recovery has entered a slower phase, with global supply shortages starting to weigh on the economy too. In addition, India’s vaccination coverage remains low, leaving the economy exposed to the threat of further virus outbreaks. All of this underscores the need for the RBI to keep policy supportive. Indeed, the Bank said in its monthly bulletin this week that India “is still digging out of one of the deepest contractions to hit any major economy during the pandemic”. The report concluded that “policy support for a sustained and inclusive recovery may be needed for longer”. While further steps will be taken to gradually withdraw banking sector liquidity, we expect monetary policy to remain accommodative for several more months.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services