India’s Economy will Stabilize Gradually, says RBI Governor

The country’s economy has been hit hard due to the coronavirus pandemic and lockdown. India's economy has been predicted around the range of 10% by most of the banks and economists around the world for the fiscal year 20-21.

Governor of Reserve Bank of India Shaktikanta Das on Wednesday addressed the FICCI National Executive Committee Meeting. He said the economic recovery has not yet been fully entrenched and further added that the GDP data in the first quarter of FY21 is a reflection of how the pandemic shattered the country’s economy.

Das said the country’s economic recovery will be gradual as the effect of Covid-19 has still not diminished.

While addressing the members of the Federation of Indian Chambers of Commerce & Industry’s national executive committee, Das said, “High-frequency indicators of agricultural activity, the purchasing managers index and certain private estimates on unemployment point to some stabilisation of economic activity in the second quarter of the current year. By all indications, the recovery is likely to be gradual as efforts towards re-opening of the economy are confronted with rising infections.”

According to Das, as the country is now moving at ease with the lockdown restrictions, the Indian economy is showing signs of going back to normalcy. Das said that the central bank is paying attention to both growth and financial stability, and has taken various measures to protect the financial system and support the economy during thesetough times.

Das’ commented this after Prime Minister Narendra Modi said "green shoots" of recovery were clear in the country’s economy, and that India had undertaken “deep structural reforms” and implemented “targeted” relief packages for the country’s poor during the pandemic.

According to a statement by Das, the IMF has predicted that the biggest recession in the world is coming, which is a sign of danger. There has been a huge decline in imports and exports in many countries. He went on to say that India's position in the Corona scenario is better than that of G-20 countries.

Das also said that the central bank is “battle-ready” for whatever outcome the country is about to face due to the current crisis. 

Das advised various measures to overcome the falling economy. He said that India should aim to increase the participation in the global value chains (GVCs) and the domestic policies need to pay heed to the correct blend of local and foreign content in exports. 

“It is also important to learn from global experience and nurture those trade agreements that go beyond traditional market access issues,” he added.


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