COVID-19 second wave hits demand more than supply: RBI

COVID-19 second wave hits demand more than supply: RBI

FPJ Web DeskUpdated: Tuesday, May 18, 2021, 10:22 AM IST
article-image
Economy |

As the severe COVID crisis and the resultant lockdowns have shut down economic activities to a great extent, Reserve Bank of India (RBI) said in its May bulletin that demand and employment have been among the most impacted economic aspects amid the second COVID wave.

The economic slowdown is not as severe as when the pandemic struck in 2020. "The biggest toll of the second wave is in terms of a demand shock - loss of mobility, discretionary spending and employment, besides inventory accumulation, while the aggregate supply is less impacted. The resurgence of COVID-19 has dented but not debilitated economic activity in the first half of Q1: 2021-22. Although extremely tentative at this stage, the central tendency of available diagnosis is that the loss of momentum is not as severe as at this time a year ago," the RBI said.

COVID-19 second wave has had a bigger impact on aggregate demand than on aggregate supply.

The RBI Bulletin for May 2021 noted that the real economy indicators moderated through April-May 2021, IANS said.

"The biggest toll of the second wave is in terms of a demand shock - loss of mobility, discretionary spending and employment, besides inventory accumulation, while the aggregate supply is less impacted," it said.

On the NBFC segment, the report said that the consolidated balance sheet of NBFCs grew at a slower pace in Q2 and Q3 2020-21. However, NBFCs were able to continue credit intermediation, albeit at a lower rate, reflecting the resilience of the sector.

The Reserve Bank and the government undertook various liquidity augmenting measures to tackle Covid-19 disruptions, which facilitated favourable market conditions as indicated by the pick-up in debenture issuances.

RECENT STORIES

Bank Of India Faces ₹564 Crore Penalty From Income Tax Department; Yes Bank Also Hit With ₹113...

Bank Of India Faces ₹564 Crore Penalty From Income Tax Department; Yes Bank Also Hit With ₹113...

The Impact Of AI On Psychometric Testing

The Impact Of AI On Psychometric Testing

Shapoorji Pallonji Group's Afcons Infrastructure Files Draft Red Herring Prospectus For ₹7,000 Cr...

Shapoorji Pallonji Group's Afcons Infrastructure Files Draft Red Herring Prospectus For ₹7,000 Cr...

ICICI Securities' Retail Distribution Head Quits; Exchange Filing Reveals

ICICI Securities' Retail Distribution Head Quits; Exchange Filing Reveals

Exploring The Technological Foundation Of Harambe Token

Exploring The Technological Foundation Of Harambe Token