RBI noted in a latest update today that the immediate impact of geopolitical aftershocks is on domestic inflation, with close to three-fourth of the consumer price index at risk. The elevation in international prices of crude, metals, and fertilisers has translated into terms of trade shock that has widened trade and current account deficits. 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 per cent of the adult population fully vaccinated and 3.5 per cent having received booster doses. Furthermore, steadfast policy support put a floor underneath aggregate demand and economic activity. Fiscal policy focused on mitigating the hardships and loss of livelihood imposed by the pandemic, even as an impetus to growth was unleashed through reprioritising fiscal spending.
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