RBI Governor Shaktikanta Das says the impact of the second wave of COVID-19 has subsided by August, and economic growth will improve on a sequential basis from the second quarter onwards.
Reserve Bank of India (RBI) Governor Shaktikanta Das said on Thursday that several bullish indicators are showing a pick-up in economic activity and the Reserve Bank is currently quite optimistic about its 9.5 per cent GDP growth forecast for the financial year 2021-22.
He said by August the impact of the second wave of COVID-19 has subsided, and economic growth will improve on a sequential basis from the second quarter onwards.
Speaking at an event organized by Indian Express And financial TimesMr Das said the RBI has decided to put more emphasis on growth due to the pandemic and work in the 2 to 6 per cent inflation band set by the government.
The central bank wants to move slowly towards achieving the 4 per cent target over time, he said, adding that a sustained increase in inflation is unlikely.
Easier liquidity conditions in global markets are among the conditions that are driving the markets domestically, he said, clarifying that there is no evidence of higher asset prices affecting inflationary conditions.
Responding to a question, he said the RBI’s rate setting panel would take a call on whether or not to continue with the accommodative stance and added that it does not see high inflation as normalizing.
The banking system’s gross non-performing assets ratio stood at 7.5 per cent at the end of the June quarter, and is “manageable” so far, Mr Das said, underlining that lenders also have adequate capital buffers.
To a question on the high cut made by banks in debt resolution, he said there is scope for improvement in the functioning of the IBC which may also include legislative changes and the time taken by the bankruptcy courts for matters.
On cryptocurrencies, Mr Das said that the RBI has conveyed its “serious and major concerns” regarding cryptocurrencies to the government and now the government will have to decide how to deal with the proliferation of such platforms.
Mr Das said that we need a “credible answer” on the contribution of private cryptocurrencies to the Indian economy going forward.
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