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The Reserve Bank of India (RBI) in its article on the state of the economy has stated that the Indian economy is on the path of a durable recovery on the back of conducive monetary and credit conditions, the global headwinds notwithstanding. Domestically, there have been several positives on the COVID-19 front, in terms of reduced infections and faster vaccinations. The article said the Indian economy is clearly differentiating itself from the global situation, which is marred by supply disruptions, stubborn inflation and surges of infections in various parts of the world. Notwithstanding the global headwinds, the article said mobility is rapidly improving, the job market is recouping, and overall economic activity is on the cusp of a strengthening revival.

It noted ‘Overall monetary and credit conditions stay conducive for a durable economic recovery to take root’. The global economic outlook remains clouded by uncertainty with headwinds from multiple fronts at a time when many economies are still struggling with nascent recoveries. There is a risk of faster policy normalisation by major central banks leading to tightening of financial conditions and stifling of growth impulses, the article said. The central bank said views expressed in this article are those of the authors and do not necessarily represent the views of the Reserve Bank of India. On capital markets, it said the Indian equity market has outperformed major equity indices in 2021 so far.

It said ‘the spectacular gains have raised concerns over overstretched valuations with a number of global financial service firms turning cautious on Indian equities’. Despite widespread concerns over valuations, the article said it is noteworthy that the percentage holding of private promoters in companies listed on NSE increased by nearly 50 basis points to 44.90 per cent at September-end 2021 from 44.42 per cent at June-end 2021. The article also said that although only 5.2 per cent of the budgeted disinvestment target of Rs 1.75 lakh crore has been achieved so far, ‘the sale of Air India has marked a turning point in the disinvestment programme of the government’.