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dpa
New Delhi
The Indian economy is showing signs of returning to normal as restrictions brought on by the Covid-19 pandemic have eased, but the medium-term outlook remains uncertain, the central bank governor said on Saturday.
Reserve Bank of India (RBI) Governor Shaktikanta Das described the pandemic as the worst health and economic crisis the world had seen in peacetime in 100 years, with unprecedented negative consequences for output, jobs and well-being.
“It has dented the existing world order, global value chains, labour and capital movements across globe and needless to say, the socio-economic conditions of a large section of world population,” he said.
The RBI had taken unprecedented steps to steer the country’s financial systems through the crisis, Das said.
While economic activity is resuming in India, it’s still uncertain when supply chains will be restored fully, how long it will take for demand conditions to normalize and what kind of durable impact the pandemic will have on India’s potential growth, Das said.
RBI’s top priority was to revive growth and at the same time ensure financial stability, he said. Das said that while the RBI’s multi-pronged approach so far had provided a cushion from the immediate impact of the pandemic on banks, the medium-term outlook was uncertain and depends on the Covid-19 curve.
Further policy action would require a careful assessment of how the crisis unfolds. Building buffers and raising capital will be crucial to ensure credit flows and resilience in the financial system, Das said.
“While the eventual success of our policy responses will be known only after some time, they appear to have worked so far,” Das said during his keynote address at the SBI Banking and Economic Conclave.
The International Monetary Fund (IMF) has predicted that the Indian economy would contract by 4.5 per cent in 2020 but was expected to bounce back in 2021 to around 6 per cent growth.
Sluggish or negative economic growth means financial stress for more people in a country where millions still live in poverty.
New Delhi
The Indian economy is showing signs of returning to normal as restrictions brought on by the Covid-19 pandemic have eased, but the medium-term outlook remains uncertain, the central bank governor said on Saturday.
Reserve Bank of India (RBI) Governor Shaktikanta Das described the pandemic as the worst health and economic crisis the world had seen in peacetime in 100 years, with unprecedented negative consequences for output, jobs and well-being.
“It has dented the existing world order, global value chains, labour and capital movements across globe and needless to say, the socio-economic conditions of a large section of world population,” he said.
The RBI had taken unprecedented steps to steer the country’s financial systems through the crisis, Das said.
While economic activity is resuming in India, it’s still uncertain when supply chains will be restored fully, how long it will take for demand conditions to normalize and what kind of durable impact the pandemic will have on India’s potential growth, Das said.
RBI’s top priority was to revive growth and at the same time ensure financial stability, he said. Das said that while the RBI’s multi-pronged approach so far had provided a cushion from the immediate impact of the pandemic on banks, the medium-term outlook was uncertain and depends on the Covid-19 curve.
Further policy action would require a careful assessment of how the crisis unfolds. Building buffers and raising capital will be crucial to ensure credit flows and resilience in the financial system, Das said.
“While the eventual success of our policy responses will be known only after some time, they appear to have worked so far,” Das said during his keynote address at the SBI Banking and Economic Conclave.
The International Monetary Fund (IMF) has predicted that the Indian economy would contract by 4.5 per cent in 2020 but was expected to bounce back in 2021 to around 6 per cent growth.
Sluggish or negative economic growth means financial stress for more people in a country where millions still live in poverty.
