India’s Delayed Recovery

According to economists in a Reuters poll, India's economic recovery from pandemic-related shutdowns is at risk of a further delay, who expect elevated inflation to hold or accelerate, not fall. Price pressures in the world's second-most populous country have soared, but the Reserve Bank of India is not expected to raise interest rates until at least the beginning of the next financial year. With lingering concerns about risks to growth, that leaves the bank slightly behind many of its emerging market peers that are already raising rates. Inflation was forecast to be well above the bank’s medium-term target of 4% but was projected to remain below the 6% upper threshold until at least the end of 2024. Even as those uncertainties about the pace of the recovery prevail, the Indian stock market appears to be unfazed as share prices repeatedly reach record highs. Investors have flocked to Indian shares as businesses and mobility recuperated from the second wave of COVID-19 more quickly than expected.