Economy Revives Steadily as per RBI Report
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In its ‘State of the Economy’ report, RBI mentions that the domestic situation has improved after a considerable decrease in COVID-19 infections and increased vaccination numbers. Mobility is improving steadily, the job market is slowly reviving too, and the overall economy is moving towards a strengthening revival.

Even though the revival has picked up the pace, the pace at which improvement is happening is still uneven across various sectors of the economy. The report also mentioned the increasing cost pressures in various segments. As per the Purchasing Managers’ Index (PMIs), input cost pressures increased across services and manufacturing in October, with cost-related issues becoming more adverse in manufacturing. The number of services firms that shoot up their selling prices increased in October.

In October, consumer prices also increased; the food price index rose for the third subsequent month, scoring its highest level after July 2011. The primary reason is increasing cereal and vegetable oil prices.

Despite a bit of moderation, the inflation of edible oils stood elevated. Amongst vegetables, prices of onions and tomatoes have sharply increased in November. The tomato prices have been soaring high when compared to the prices a year ago.

An increase in demand has also exhibited strength, with record-breaking imports of electronic products for the second subsequent month in October. The increasing demand was also driven by the mega sales events carried out by significant e-commerce firms during the festival period. 

Due to the government’s secure revenue position, it has been able to incur higher expenditure as per the report. Capital and revenue expenses increased by about 38.3% and 6.3% during 2020-21, respectively. The increase in capital expenditure was primarily led by the Ministry of Road Transport and Highways, which consumed about 68.2% of its anticipated capital expenditure concerning FY22.

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in

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