Indian economy has shown resilience amid global recession fears, says its reserve bank

The Indian economy has shown resilience amid fears of recession and war across the global landscape, the RBI (Reserve Bank of India) said on Saturday. Counting monsoon revival, pick-up in manufacturing and services, and stabilisation of inflation pressures among some of the factors that have contributed, the central bank underlined the brightened outlook and conditions for a sustainable high growth trajectory in the medium-term.

Strong buffers in the form of adequate international reserves, sufficient foodgrain stocks and a well-capitalised financial system have also helped the Indian economy, the RBI underscored in its July bulletin.

With the Ukraine war set to enter its sixth month, and coronavirus tally surging yet again in some parts of the world, several countries have been grappling with the rise in the price of essentials.

In the United States, as June figures were revealed this week, sparking new concerns, US president Joe Biden in a statement highlighted: "While today's headline inflation reading is unacceptably high, it is also out-of-date. Energy alone comprised nearly half of the monthly increase in inflation."

At 9.1%, the US inflation rate was at a 40-year high in June.

Meanwhile, in the wake of current global inflationary episode, the role of monetary policy in response to supply-driven inflation has been in focus, the cenral bank said in the July bulletin. "The role of supply side factors in shaping the trajectory of food inflation and inflation in general has been well-recognised. Timely and reliable indicators of crop production are key to assessing inflationary trends in the near future," it further said.

India's inward remittances have proven "to be a resilient source of current account receipts during the pandemic", it highlighted. "Cross-country remittances inflows are found to be driven by altruism motive, captured by the infection rate in the destination country and the stringency of the lockdown in the source countries. The fifth round of the remittances survey for 2020-21 finds that the share of Gulf countries in total remittances has declined, reflecting slower pace of migration and presence of Indian diaspora in informal sectors which was hit the most during the pandemic period," it said.

Earlier this week, the government data revealed that India's retail inflation marginally eased to 7.1% in June, as compared to 7.04% a month earlier.

Meanwhile, the annual rate of inflation based on all-India Wholesale Price Index (WPI) stood 15.18% for the month of June – this bucked the three month trend of rise.

In May, the figure had leapt to a three-decade record high of 15.88% (year-on-year).