‘RBI Hopeful of 9.5% Growth; Cos Better Prepared for Any 3rd Wave’

India’s central bank governor Shaktikanta Das Thursday reiterated estimates of 9.5% growth in FY22, underscoring business preparedness in the event of a third pandemic wave that could disrupt the scorching pace of recovery registered in the fiscal first quarter.

“At this point in time we are quite optimistic of the 9.5% growth we have projected for the current year. Having said that, I must say that the uncertainty of a possible third wave remains,” Das said during a media webcast.

“But I think people and businesses are more adapted to the Covid-protocols and more adapted to continue with their business activities. But again, everything depends on the severity and spread of a third wave of the pandemic, should it happen.”

Das added that while lingering effects of the second pandemic wave slipped into July and August, the current quarter will do better sequentially considering that most fast-moving indicators were looking upbeat.

India’s economy expanded at a record pace in the June quarter, albeit on a low base.

He also brushed aside concerns over asset quality-at both banks and non-bank lenders.

“According to the numbers which we have, currently the NPA levels look manageable; the last data at the end of June was about 7.5%,” the governor said.

“We have impressed upon banks and nudged them to raise additional capital proactively in anticipation of some stress which may arise. Most of the banks have mobilized additional capital, which should stand to their Defence if there is increase in assets. But as I said, at the moment, the situation is well within manageable limits.”

Das said the central banks has decided to priorities growth because of the pandemic and operate in the 2-6% inflation band set by the government.

The central banks will seek to gradually move toward achieving the 4% target over a period of time, he said, adding that the possibility of a sustained increase in inflation is unlikely.

“In the pandemic times, we have decided to give more emphasis to growth, because if the growth gets completely decelerated, then it will pose huge long-term challenges for the economy to revive,” the government said.

“Our expectation is that from now on, the inflation will gradually moderate. The possibility of a sustained increase in inflation beyond 6% is highly unlikely at this point of time.”

Das also said that easy liquidity conditions in the global markets is leading to a surge in the local markets, delinking high asset prices from on-the-ground inflation. S-ET

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *