Uncertainty Over Indian Economy, Tough To Predict Future: RBI

Regarding the economic slowdown, the Reserve Bank of India has said the time ahead is full of uncertainties. The RBI's monetary policy for October said that the unprecedented 23.9% decline in GDP and domestic economic activity in the first quarter of the current fiscal has been severely affected by the pandemic. As a result, indices related to industry and services present a mixed picture. Simply put, one cannot go certain about the future.

The RBI says that increased wages under the Prime Minister's Garib Kalyan Rozgar Yojana and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) are strengthening demand in rural areas but demand in urban areas remains weak. That is the Coronavirus pandemic and the lockdown to prevent it has affected cities more than villages.

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Regarding consumer confidence in the economy, employment and income, then it hit an all-time low in September. That is the consumers were very disappointed in the economic situation. However, there is definitely some improvement regarding future expectations.

This brings a mixed picture of business expectations. Manufacturing companies expect goods’ demand to increase in the country in the coming years, and the confidence of companies providing various services is shaken about the economy.

The RBI has clearly stated that the uncertainty of the pandemic is making GDP forecasts extremely challenging. However, broadly speaking, if the economic activity returns to normal in this financial year, the economy can achieve a growth rate of 10.1% in the year 2021-22 after shrinking by 9.5% in 2020-21.