India's economic recovery stumbles, setting stage for sustained low rates

30th July,2021

In June, India's economy exhibited indications of cooling as the gradual easing of localised lockdowns hampered business, a point that is likely to persuade monetary policymakers gathering next week to retain interest rates at record lows in order to nurture a long-term recovery. Contractions in India's manufacturing and services sectors, which account for more than two-thirds of the country's GDP, pushed the overall activity indicator down to 5 from 6, the lowest level since February and the first decline since May 2020 data. A three-month weighted average is used to smooth out volatility, and a shift to the left indicates a loss of momentum. While the devastating second wave of Covid-19 has passed, the economy is still reeling from the sluggish pace of vaccines and the possibility of a new wave. According to Abhishek Gupta, India economist at Bloomberg Economics, a basket of high-frequency, alternative, and market indicators like as retail activity and traffic congestion aren't exhibiting the type of significant rebound that was predicted.