Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday said that despite a brighter outlook for the economy, downside risks to growth remain as Covid cases surge. The governor’s note of caution comes at a time many states are planning to reimpose local restrictions.
“After witnessing a sharp contraction in GDP by 23.9% in Q1:2020-21 and a multi-speed normalisation of activity in Q2, the Indian economy has exhibited stronger-than-expected pickup in momentum of recovery,” Das said at a foreign exchange dealers’ conference.
Das added, “We need to be watchful about sustainability of demand after festivals and a possible reassessment of market expectations surrounding the vaccine. The monetary policy guidance in October emphasized the need to see through temporary inflation pressures and also maintain the accommodative stance at least during the current fiscal and into the next financial year.”
States and Union territories may reimpose local restrictions to contain the spread of Covid based on their own assessment, the Union home ministry said on Wednesday.
In his address, the RBI governor also said that India’s move towards capital account convertibility will be a process rather than an event.
Das also assured that the central bank is committed to the orderly functioning of the markets.Move towards capital account convertability will be an event, Das added