India’s economic recovery will be gradual, even as the government rolled out a host of measures, said Reserve Bank of India governor Shaktikanta Das. However, Das assured the industry that the central bank will take all necessary steps to support the economy.
“RBI is battle-ready, whatever measures are required (for the economy), will be taken by the RBI,” he said.
The country’s economy contracted by a shocking 23.9 per cent in the first quarter of the current financial year, owing to the nationwide lockdown imposed since March 25 to contain the spread of the coronavirus pandemic.
Das, who was speaking at virtually organised Ficci function Wednesday, said that RBI has persistently infused liquidity into the system and this has ensured large borrowing by the government at low rate and in a non-disruptive manner. The liquidity infusion in other sectors has also worked well, he said.
Citing World Bank assessment, Das added that global recovery would take longer as it is not fully entrenched.
“The recovery is, however, not yet fully entrenched and more over in some sectors the optics which was noticed in June and July, they appear to have levelled off… by all indications, the recovery is likely to be gradual as efforts towards reopening of the economy are confronted with increasing infections," Das said.
The RBI governor also said that the situation has significantly improved in the second quarter of the current financial year after the pandemic induced lockdown brought the economy to a near-halt.
The Asian Development Bank (ADB) Tuesday pegged India’s growth to contract by 9 per cent in 2020-21. The ADB also said that while the crisis may have bottomed out, the picture across the the South Asian region continued to give mixed signals.
The Narendra Modi government, in May had announced a Rs 20 lakh crore stimulus package to support the economy..