Reserve Bank of India Governor Shaktikanta Das said on Wednesday that economic recovery in the country is likely to be gradual, as the uptick seen in some sectors in June-July appears to have levelled off. The central bank stands “battle-ready” to take any measures needed to ensure liquidity in the financial system and revive the economy, the RBI Governor said, in a virtual address to members of industry body FICCI. The recovery, however, is “not fully entrenched”, Mr Das said.
“In some sectors, the upticks noticed in June and July appear to have levelled off… High frequency indicators point to some stabilisation in July-September, however the recovery is “not fully entrenched” as efforts towards reopening of the economy are confronted with increasing infections, the RBI chief said.
His remarks come days after official data showed consumer inflation in the country eased marginally in August, but remained above the central bank’s target range of 4-6 per cent for the fifth month in a row. That supported views that the RBI will avoid easing monetary policy further in its next policy review, scheduled in October.
Referring to the gross domestic product (GDP) data released by the government last month, the RBI Governor said it was a “reflection of the ravages of the COVID-19”. The country’s GDP crashed a record 23.9 per cent in the April-June period, as consumer spending, private investments and exports collapsed during the world’s strictest lockdown imposed in late March to curb the spread of COVID-19.
On global economy, the RBI Governor said the world is estimated to have suffered sharpest contraction in living memory in April-June 2020 on a seasonally-adjusted quarter-on-quarter basis. The global merchandise trade registered a steep year-on-year decline of over 18 per cent in the second quarter, the RBI Governor highlighted, citing World Trade Organization (WTO) data.
Chief Economic Adviser Krishnamurthy Subramanian had told NDTV earlier this month that the coronavirus pandemic has caused an exogenous shock to India, but “the worst is behind us” and economic recovery “is clearly on”.