The corona epidemic is causing a more rapid recovery in the economy as not expected. Thus, economic growth will come into a positive zone in the third quarter of the current financial year 2020-21. While the growth will remain at 0.1 per cent, positive growth is encouraging. This is expected in an article ‘State of Economy’ of the Reserve Bank of India (RBI).
According to the RBI bulletin, there are many signs of higher than expected recovery of economic recovery. The bulletin reads ‘State of Economy’ by official RBI officials. It has been clarified in the ortical that these are the author’s own views and should not be considered as rbi’s view.
Record decline in first-quarter GDP
The corona epidemic had affected the Indian economy very badly. GDP shrank by 23.9 percent in Q1 FY20-21, while economic recovery efforts in the second quarter showed an impact and the economy shrank at 7.5 percent. According to the RBI bulletin, GDP growth will be positive in the third quarter. While it will grow at a very modest growth of about 0.1 percent, the economic recovery positive growth is encouraging.
Two factors boost economic momentum
According to the RBI bulletin, the role of two factors was most important behind boosting GDP growth. Corona infection cases have decreased since mid-September and investment and consumption demand is now rising rapidly. In addition, the focus from the composition extension through the Pradhan Mantri Garib Kalyan Package has shifted from self-reliant India to investment extension, i.e., consumption increased during the epidemic, but now the investment has also accelerated. According to the RBI bulletin, there was no fear of the second wave of corona epidemic among the people, creating a better environment for macroeconomic policies and the economy becoming increasingly normal.