RBI's Das says India's economic recovery stronger than expected

Mint 

Gopika Gopakumar

26.11.2020

Mumbai: Reserve Bank of India Governor Shaktikanta Das on Thursday said the Indian economy has seen stronger-than-expected pickup in recovery after the sharp contraction in the first quarter. Das, however, said the downside risks to growth continue due to the recent surge in covid-19 cases.

“After witnessing a sharp contraction in GDP by 23.9% in Q1:2020- 21 and a multi-speed normalisation of activity in Q2, the Indian economy has exhibited stronger than expected pick up in momentum of recovery. Even as the growth outlook has improved, downside risks to growth continue due to recent surge in infections in advanced economies and parts of India," the governor said while speaking at a foreign exchange dealers’ conference.

Das also warned about the sustainability of demand after festivals and a possible reassessment of market expectations surrounding the vaccine. He also reiterated that the central bank’s monetary policy guidance remains accommodative at least during the current financial year and into the next financial year.

The governor also said India’s move towards capital account convertibility will be a process rather than an event. He also assured that the central bank was committed to the orderly functioning of the markets.

“Capital account convertibility will continue to be approached as a process rather than an event, taking cognizance of prevalent macroeconomic conditions. A long term vision with short and medium term goals is the way ahead," he added.

The central bank’s monetary policy committee will be meeting for the bi-lateral monetary policy next week from 2 to 4 December.

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