Central bank: India has seen the worst, barring another wave of COVID-19

Central bank: India has seen the worst, barring another wave of COVID-19

MUMBAI: Barring another wave of COVID-19 infections, the worst is over for India's economy and policymakers may soon have more room to support a recovery, the central bank said in its January bulletin released on Thursday.

"Recent shifts in the macroeconomic landscape have brightened the outlook, with GDP in striking distance of attaining positive territory and inflation easing closer to the target,“ the Reserve Bank of India (RBI) said in an article on the state of the economy.

"If these movements sustain, policy space could open up to further support the recovery,“ it added.

The RBI slashed interest rates early last year to cushion the shock from the coronavirus crisis, but has left rates unchanged in recent months, cautious of rising inflation.

The RBI expects Asia's third-largest economy to contract by 7.5 percent in the current fiscal year to March, but analysts believe it is likely to escape recession and see modest growth in the current quarter.

Growth will be mostly consumption driven, the RBI said.

The need to kickstart investment is growing more urgent to secure a durable turnaround and a sustainable growth trajectory, the RBI said.

It also added that the cash sitting idly on the balance sheet of companies and banks and the funds