The RBI’s Shaktikanta Das voiced hope regarding the revival of the Covid-hit economy, predicting that this quarter (July-September) will be better than the prior quarter (June). Inflation expectations and inflation are “quite seriously” anchored around the target of 4 percent, he said.
For 2021 and 2022, the RBI Governor reiterated that extra liquidity has no impact on asset prices, including the current high stock prices in India. It was reiterated that the Reserve Bank of India (RBI) is keeping an eye on growth and inflation before making any changes to its current policy.
An interview between P Vaidyanathan Iyer, Executive Editor (National Affairs), The Indian Express, and Amy Kazmin, South Asia Bureau Chief for The FT revealed that “the fast-moving indicators are looking fairly bright”. The sale of two-wheeled vehicles, passenger automobiles, steel, and cement output, and GST are just a few of the fast-moving indicators that we follow.”
Third in a series of online conversations organized by The Indian Express and the Financial Times to set the agenda.
According to Das, the RBI’s prediction of 9.5 percent growth for this fiscal year is still valid at this point in time. “I believe it will hold up. There will be a sequential improvement in the second quarter of the current year compared to last year’s second quarter. This year will be affected by the base effect of last year, he said. “The base effect will gradually diminish as time goes on,” he said of the economic growth.
The third wave of Covid pandemic is possible, but he cautioned against becoming overly optimistic about it. That so, the uncertainty of a hypothetical third wave, about which people discuss, remains. Even when there’s a problem, I think people and organizations are more comfortable with the Covid protocols.”
“As I have stated in my own statement, the current inflation is primarily driven by supply-side reasons, partially because of international considerations like high commodity prices, high shipping charges, and container expenses,” Das said in response to the question of inflation.
Commodity prices are often rising, which is causing domestic inflation. High prices of gasoline and diesel, as well as particular goods or items like appliances or edible oil, are among the domestic reasons.”
When it was above 6 percent for a few months, it was down to 5.6 percent in the last reading, according to the Bureau of Labor Statistics. According to our forecasts, inflation will progressively decline from now on. A persistent inflation rate above 6 percent is therefore quite unlikely at this moment, but we remain vigilant,” he said.
Private and public sector financial institutions have mobilized more resources that should serve as a defense. Even while distressed assets have risen in the past few years and continue to do so today, they are still manageable at the moment,” he remarked.