RBI Annual Report 2021-22

RBI Annual Report 2021-22

WHAT HAS HAPPENED?

The Reserve Bank of India (RBI) on Friday (May 27), released the RBI Annual Report 2021-22.

It is a statutory report of its Central Board of Directors. The Report covers the working and functions of the Reserve Bank of India for the period April 2021 - March 2022.

The Central bank, in its report, made a strong case for structural reforms, Saying that they are essential for sustained, balanced and inclusive growth, especially by helping workers adapt to the after-effects of the pandemic by reskilling and enabling them to adopt new

technologies for raising productivity.

The RBI also noted that structural reforms will be important to deal with the after-effects of the pandemic.

FUTURE PATH OF GROWTH

In its annual report, the Reserve Bank of India also stressed that the future path of growth would be conditioned by addressing supply-side bottlenecks, Calibrating monetary policy to bring down inflation and boosting capital spending.

IMPACT OF RUSSIA-UKRAINE WAR

The escalation of geopolitical tensions into war from late February 2022 has delivered a brutal blow to the world economy, Battered as it has been through 2021 by multiple waves of the pandemic, supply chain and logistics disruptions, elevated inflation and bouts of financial market turbulence, triggered by diverging paths of monetary policy normalisation, it added.

"... The immediate impact of geopolitical aftershocks is on inflation, with close to three-fourths of the consumer price index at risk.

The elevation in international prices of crude, metals and fertilisers has translated into a term of trade shock that has widened

trade and current account deficits," the report said.

SLOW RECOVERY CONCERN

High-frequency indicators already point to some loss of momentum in the recovery that has been gaining traction from the second quarter of 2021-22, With 86.8% of the adult population fully vaccinated and 3.5 per cent having received booster doses.

CONCERNS ON INFLATION

"The inflation trajectory going forward is subject to considerable uncertainty and would primarily depend on the evolving geopolitical situation," the report said.

"A faster resolution of the geopolitical conflict and no further severe COVID-19 waves could subdue and even reverse these pressures and help contain core inflation," it added.

EXCISE DUTY CUT, CURBS ON EXPENDITURE

The RBI further said supply-side policy interventions such as removing customs duty on import of raw cotton, prohibiting wheat 

exports, reducing road and infrastructure cess (RIC) on petrol by Rs 8 per litre and diesel by Rs 6 per litre, Increasing exports duty on certain steel products, reducing imports duty on certain raw materials for steel and plastic manufacturing, restricting sugar exports, removing customs duty and agriculture infrastructure and development cess (AIDC) on import of 20 lakh tonnes of crude sunflower oil and crude soybean oil and other measures, As may be taken could, however, provide some offset.

The substantial increase in government capex outlay could crowd in private investment and propel a virtuous cycle, improving aggregate demand, the report said.

National Infrastructure Plan and National Monetisation Pipeline are also expected to give a major thrust to infrastructure spending.

GDP ESTIMATES

In recognition of the knock-on effects from geopolitical spillovers, The RBI's Monetary Policy Committee had revised downwards real

GDP growth for 2022-23 to 7.2 per cent in its April resolution - a decline of 60 basis points from its pre-war projection, Mainly due to higher oil prices weighing on private consumption and higher imports reducing net exports.

Q. RBI was set up on the basis of the recommendations of ?

A) Indian Central Bank Enquiry Committee

B) Royal Commission

C) Simon Commission

D) Nehru Report