This macroeconomic scenario remains subject to non-negligible risks. In the short term, the new worsening of the pandemic – although much less severe than in the past waves and currently more pronounced in other countries of the euro area – could lower household and business confidence and delay the recovery of contact-intensive sectors.
In India, as in most countries, monetary policy framework has evolved in response to and as a consequence of financial developments, openness and shifts in the underlying transmission mechanism. The evolution of monetary policy framework in India can be seen in phases.