Reserve Bank of India (RBI) Governor Shaktikanta Das at a virtual seminar on Wednesday said the central bank is ready to take all necessary measures to prepare the economy and banking system to fight the Covid-19 pandemic.
The economic recovery remains slow and will be gradual, while the bank credit growth remains muted in the system, Das added.
The RBI has taken a slew of measures beginning March to help the banking system fight the pandemic which included a cumulative repo rate cut of 115 bps and an array of liquidity measures to help various sectors- including multiple rounds of targeted long term repo operations.
While addressing the FICCI National Executive Committee Meeting, Das said the economic recovery has not yet been fully entrenched and went on to add that the GDP data in the first quarter of FY21 is a reflection of how the pandemic disrupted the country’s economy.
“Recovery is not yet fully entrenched. In some sectors, the optic noticed in June and July appears to have levelled off. By all indications, the recovery is likely to be gradual as efforts towards reopening of the economy are confronted with rising infections,” he said.
The governor’s comments came at a time when India’s economy is reeling under severe economic crisis. However, Das said that some high-frequency indicators have improved and indicate “some stabilisation” of economic activity in the second quarter of the current fiscal year.
“Contractions in many other sectors are simultaneously easing,” he said.
Das also assured that the central bank has made adequate liquidity infusion to facilitate borrowing by the government at low rate. The central bank is “battle-ready” to take whatever steps needed to further stabilise the ailing economy, he added.
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