RBI warns of demand shock as 2nd Covid wave overwhelms India

The Reserve Bank of India said in its latest bulletin that the biggest economic impact during the second wave has been on the demand outlook. The central bank said demand has seen a sharp fall during the April-May period, but added that the situation is better than the first wave in 2020.

The Reserve Bank of India on Monday said in its May bulletin that the ferocity of the second wave has overwhelmed India, adding that real economic indicators have moderated through April-May 2021. According to the central bank, the biggest toll of the second wave is in terms of a demand shock. Loss of mobility, lower discretionary spending, lack of employment and inventory accumulation are some of the factors that indicate weaker demand during the second wave in India. While RBI said that the resurgence of Covid-19 has dented economic activity in the first half of Q1:2021-22, it has not yet “debilitated” it.