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RBI likely to keep rates unchanged, continue accommodative stance

RBI likely to keep rates unchanged, continue accommodative stance

The pickup in the recovery has been the most impressive development in the recent times, the high frequency indicators such as composite PMI ranged between 55-58 (same as pre-covid levels), unemployment rate recorded at 6.9% after reaching high of 27% in May’20, mobility levels restored and E-way bills higher at an average of 2.0-2.3mn compared to an average of 1.2-1.8mn pre-covid has put India in a favorable spot.

However, since March India recovery has been hit by new headwinds. The resurgence of pandemic, rising oil prices and bond yields rising globally. With the cases rapidly rising in the second wave with doubling rate falling from 504 days to 202 days as of end of March and lockdowns mushrooming in certain parts there is a possibility the indicators which have continued to grow strong may show some loss in momentum, but the faster and mass rollout of vaccine from April onwards would help reach a critical mass in 2H which would help in restoration of the recovery.

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