The Reserve Bank of India (RBI) says that despite the geopolitical challenges and its consequences, the pace of India’s economic recovery will continue in the current financial year as well.
In the annual report 2021-23 released by the RBI on Friday, it has been estimated that the country’s economy started coming back on track in FY 22 after recovering from the Corona epidemic and this pace of economic recovery will be seen in FY 23 as well.
The report said that the increase in capital expenditure by the government will encourage private investment and this will ultimately lead to an increase in aggregate demand.
According to the RBI report, a target of 2025 has been set for the completion of both the Rs 100 lakh crore National Infrastructure Plan and the Rs 6 lakh crore National Monetization Pipeline. Both these schemes will increase the expenditure in the infrastructure sector.
Efforts made in the direction of supply related management through process improvement will enable the Indian economy to meet challenges with greater flexibility.
According to RBI, business and consumer sentiment remained strong on the back of Covid vaccination and spurt in economic activity.
The report said that the recovery in demand, however, is based on private investment. In terms of supply, the mining and manufacturing sectors have registered a boom.
The service sector, which was the most affected during the Corona epidemic, is coming back on track since the second quarter of the last financial year.
RBI has emphasized on reforms in the labor market. According to him, it is necessary to retrain the skills so that they can adapt to the post-pandemic environment.
On the financial markets, the report said that due to excessive liquidity and soft monetary policies of developed economies, the prices of financial assets have reached an all-time high.
The relaxation of Covid-19 restrictions and package announcements also gave a boost to the financial market.
India’s financial market also remained balanced due to liquidity. However, the second wave of corona adversely affected the sentiment.
The Indian stock market also jumped sharply in FY22 on the lines of global markets on the back of economic activity and the spurt in Covid vaccination.
The participation of retail investors in the stock market increased and 3.46 demat accounts were opened in FY22. 1.42 Demat Accounts were opened in FY21.
An average of 28.8 lakh demat accounts were opened per month during the last financial year as compared to an average of 11.8 lakh per month in FY21 and an average of 4.2 lakh demat accounts per month in FY20.