The Reserve Bank’s number is facing ups and downs due to the cost cuts on companies that boosted operating profits. The team of economists (authors of the nowcasts) also used a number of indicators from flush banking liquidity to vehicle sales to signal the illuminating prospects for October. If this growth is sustained then the Nation’s economy will return to growth in the October-December quarter, earlier than projected by Governor Shaktikanta Das last month, when he pledged to keep monetary policy accommodative.
However, “there is a grave risk of generalization of price pressures, unanchoring of inflation expectations feeding into a loss of credibility in policy interventions,” the team of economists wrote in the Reserve Bank’s bulletin.
Further, “Lurking around the corner is the third major risk — stress intensifying among households and corporations that has been delayed but not mitigated, and could spill over into the financial sector,” the economists concluded.