The Reserve Bank Of India (RBI) stated in its latest monthly bulletin that the overall economic activity in India remains strong, with upbeat consumer and business confidence and upticks in several incoming high frequency indicators. On the vaccination front, India has made rapid strides. On the Omicron variant, the recent data from the UK and South Africa suggest that such infections are 66 to 80% less severe, with a lower need for hospitalisation. This has brightened near-term prospects and financial markets reflect this optimism.

Alongside, monetary and credit conditions are improving with bank credit picking up in a gradual but sustained manner. India’s digital payment ecosystem is also expanding rapidly. In contrast, the global outlook remains clouded by considerable uncertainty. Inflation continues to mount across geographies amidst disruptions in production, supply chains and transportation. Consequently, the divergence between monetary policy stances across jurisdictions has widened. There are indications that supply chain disruptions and shipping costs are slowly easing, although the waning of inflation may take longer.

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