Mumbai: India's overall economic activity remains strong, driven by an upbeat consumer confidence and uptick in bank credit, and expectations that Omicron may turn out to be a "flash flood rather than a wave" have further brightened the prospects, according to a RBI article.

"On the vaccination front, India has made rapid strides. On the Omicron variant, the recent data from the UK and South Africa suggest that such infections are 66 to 80 per cent less severe, with a lower need for hospitalisation," the article on the state of economy published in the RBI Bulletin said on Monday.

Amidst upbeat consumer and business confidence and an uptick in bank credit, aggregate demand conditions stay resilient while on the supply front, rabi sowing has exceeded last year's level and the normal acreage, it noted.

Noting that manufacturing and several categories of services remain in expansion, the article said, "overall economic activity in India remains strong, with upbeat consumer and business confidence and upticks in several incoming high frequency indicators".   "Expectations that Omicron may turn out to be more of a flash flood than a wave have brightened near-term prospects," it said.

The central bank said the views expressed in the article are those of the authors and do not necessarily represent the views of the Reserve Bank of India (RBI).             

There are indications that supply chain disruptions and shipping costs are slowly easing, although the waning of inflation may take longer. 

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