BackRBI annual report 2021-22 released. Here are key highlights
Headline inflation spiked on repetitive supply shocks during the year, said RBI on its annual report
PremiumThe Indian economy renewed its tryst with the recovery from the pandemic in 2021-22, albeit interrupted by a virulent second wave of infections and a relatively milder third wave, said the Reserve Bank of India (RBI).
High frequency indicators already point to some loss of momentum in the recovery that has been gaining traction from the second quarter of 2021-22. Furthermore, steadfast policy support put a floor underneath aggregate demand and economic activity. Thus, as per RBI, the experience of 2021-22 has yielded valuable lessons that will illuminate the path of the Indian economy in the year ahead.
Headline inflation spiked on repetitive supply shocks during the year, though reversion to the target was also evident as shocks receded, RBI said on its Annual Report for 2021-22 released on Friday.
The monetary policy remained accommodative and fostered congenial financial conditions for the recovery to take root, while being vigilant that inflation remains within the target going forward.
“The sustained strength of exports and revival in inbound remittances underpinned the viability of the balance of payments, with net capital flows also contributing to the accretion to foreign exchange reserves," the central bank added.
The escalation of geopolitical tensions into war from late February 2022 has delivered a brutal blow to the world economy, battered as it has been through 2021 by multiple waves of the pandemic, supply chain and logistics disruptions, elevated infl ation and bouts of fi nancial market turbulence, triggered by diverging paths of monetary policy normalisation. The global macroeconomic outlook is overcast with the economic costs of the war and sanctions, RBI said.
The report added that the Indian economy is relatively better placed to strengthen the recovery that is underway and improve macroeconomic prospects going forward.
The central bank, while encouraging innovation, is also factoring in the emerging risks in the FinTech segment. The involvement of BigTechs in the BFSI segment also brings along the systemic risks, it added.
To handle the above issues, the Reserve Bank’s approach will have to balance innovation with regulation, without compromising on any of the principles of risk management.
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