Not out of the woods yet, says RBI governor on economic recovery

Reserve Bank of
India Governor Shaktikanta Das said that while the global economy is
recovering, it is not completely out of the woods yet. Governor Das was
speaking at the annual FIMMDA-PDAI Annual Conference on Tuesday, the same day
India released its gross domestic product (GDP) numbers. The Indian economy grew by
20.1% in the first quarter.

Speaking at the
conference, the RBI governor said, “During May last year, in one of my
statements, I had noted that COVID-19 has crippled the global economy…it has
been more than a year since. While there are signs of recovery, we are not yet
out of the goods.”

Also Read | India’s GDP grows 20.1 % in April to June quarter

The Reserve Bank
governor said that central banks responded to the pandemic by lowering interest
rates and injected liquidity into the system by buying assets. “Many central
banks also implemented measures targeting specific market segments that were
witnessing heightened stress,” Governor Das said.

RBI did the same,
Das said, adding that apart from injecting liquidity, the Reserve Bank of India
announced measures to restructure loans to help borrowers. “The stabilization of
credit spreads across the rating ladder resulted in issuances of corporate
bonds to the tune of Rs 7.72 lakh crore in 2020–21,” Shaktikanta Das said.

India’s GDP, while
doing well in the first quarter, is yet to recover from the pandemic. The Indian
economy had contracted by 24.4% in the first quarter of last year when the
Indian government had imposed a strict lockdown across the country in a bid to
contain the COVID-19 pandemic.

Also Read | RBI monetary policy: Interest rates unchanged, GDP projected at 9.5%

In data released
on Tuesday, India’s National Statistical Office (NSO) reported that the Gross
Value Added (GVA) to the economy rose 18.8%. Agriculture, forestry and fishing,
the only sector to show growth in the first quarter of last year, further
picked up pace reporting a growth of 4.5% in the first quarter this year.

Following the release
of GDP numbers, the Indian government said that NSO numbers “reaffirm” its
prediction of an ‘imminent V-shaped recovery’ made this time last year.
Economists, however, stress that the Indian economy has not recovered to the
pre-COVID 2019–20 level yet.