Reserve Bank of India (RBI) in its monthly bulletin released on June 16, said the economic recovery will depend on the speed and scale of vaccination in the country.

“Going forward, the speed and scale of vaccination will shape the path of recovery. The economy has the resilience and the fundamentals to bounce back from the pandemic and unshackle itself from preexisting cyclical and structural hindrances,” the RBI Bulletin stated.

Though cautious optimism is returning, the Indian economy continues to wrestle with the second wave of the pandemic, the Bulletin said. “By current assessment, the second wave’s toll is mainly in terms of the hit to domestic demand. On the brighter side, several aspects of aggregate supply conditions – agriculture and contactless services are holding up, while industrial production and exports have surged compared to last year amidst pandemic protocols,” the RBI Bulletin said.

In the macroeconomic view of India’s sovereign yield curve, RBI found that the level of the yield curve has undergone a downward shift from the second quarter of 2019, reflecting the ultra-accommodative stance of monetary policy.

On the fiscal framework and quality of expenditure in India, the RBI noted in its study that the Coronavirus pandemic necessitated an overwhelming fiscal response from governments across the world.

“As India unwinds the fiscal stimulus and embarks on the path of fiscal adjustment, it is necessary to emphasise on ‘how’ over ‘how much’. This article proposes a few quantifiable indicators, i.e. ratios of revenue expenditure to capital outlay and revenue deficit to gross fiscal deficit along with threshold levels for them, that can be suitably blended into the fiscal fabric for a sustainable growth trajectory,” the RBI bulletin has noted.