New Delhi (NVI): The Indian economy, reeling under the impact of coronavirus disease (Covid-19) pandemic, will recover gradually, Reserve Bank of India (RBI) Governor Shaktikanta Das today said.
While addressing a virtual meeting of FICCI National Executive Committee, Das said, “Economic recovery is not fully entrenched; it will be gradual.”
The central bank chief also said that the RBI stands battle-ready to take whatever steps that are needed to be taken for the economy.
Persistently large liquidity infusion by RBI has ensured large borrowing by the government at a low rate and in a non-disruptive manner, the RBI governor said.
Referring to the GDP contraction of 23.9 per cent in the first quarter (Q1), Das said that it is the “reflection of the ravages of the Covid-19”.
He further noted that high-frequency indicators like agricultural activity, Purchasing Managers Index for manufacturing, certain private estimates for unemployment, point to some stabilisation of economic activity in the second quarter of the current year.
“Contractions in many other sectors are simultaneously easing,” he added.
He said that the central bank’s efforts have led to the softening of bond yields. Das also said that the RBI is very carefully monitoring the markets and will take further actions as and when required. The RBI governor said that the current bond yields are lowest in the past 10 years due to surplus liquidity.
The government and RBI have been taking measures for mitigating the impact of pandemic on the economy by introducing stimulus packages, reforms, and interest rate cuts.
However, the revival is expected to take time as there is still high uncertainty regarding Covid-19 cases across the country.