The Reserve Bank of India Governor Shaktikanta Das believes that the second wave of COVID-19 infections will not affect India’s economic journey. His statement comes amid concerns raised about the surging new coronavirus infections and restrictions being imposed in many cities.
Das, at the Times Network India Economic Conclave, said revival of economic activity should continue unabated. “I don’t see a downward revision in 10.5% growth estimate for FY22, which the RBI had given last month.” He said that he also did not foresee a repeat of the nationwide lockdown that the country had witnessed last year.
Maharashtra has recorded a spike in infections, which may be attributed to the new strains of the virus. Mumbai, on Wednesday, recorded the highest daily count to date in 2021 at over 5,000. India reported 59,118 new infections, health ministry data showed, taking its tally to 11.85 million, for the world’s third largest, after the United States and Brazil. However, this hasn’t deterred the Reserve Bank of India.
Das affirmed the central bank’s commitment to use all its policy tools to facilitate the economic revival from the debilitating impact of the pandemic while ensuring price and financial stability. With the RBI scheduled to announce its monetary policy in the first week of April, the Governor said there is no fight between the central bank and the bond market, and called for a relationship that is not combative. “There should be an orderly evolution of the yield curve. Disorderly spike in yields are an impediment to growth and will undermine economic recovery,” he said. “We have also given a special dispensation with regard to the held-to-maturity basket, which makes for another Rs 4 trillion. So, Rs 7 trillion is already available.”
The RBI, for the next fiscal, will ensure the bond purchases are of equal quantum or even more. Das said the RBI’s foreign exchange reserves accumulation is for its own needs. “The expansionary monetary policy of advanced economies will unspool at some stage. That will have a spillover impact on emerging market economies. EMs will have nowhere to go but to look at their own coffers.” He added that the central bank will ensure that the rupee is kept stable.