The Reserve Bank of India Governor Shaktikanta Das on Thursday said that despite the surge in coronavirus infections the revival of economic activity should continue unabated. Das who was speaking at the India Economic Conclave organised by the Times Network stated that the regulator’s preliminary findings show that predictions made on growth rates would not require a downward revision. The RBI expects India to grow at 10.5 percent for the fiscal year 2021-22.
“The revival of economic activity should continue unabated going forward,” the governor said. “Infact our preliminary findings show that growth rates given by us for the next year would not require a downward revision.”
Das added that India was much better prepared to deal with the new surge in Covid cases largely due to the ongoing vaccination drive.
“The renewed Covid cases in many parts of the country is a matter of concern but it’s important to keep in mind that this time around we are in a better shape,” he said. “First is that we have rolled out two vaccines, the speed at it which it has been rolled out is moving very fast. Almost 5 crore people have been vaccinated. The second aspect is people are on guard against the pandemic and third is that we don’t anticipate a lockdown like situation we saw last year.”
The governor once again reiterated that the RBI and the bond market are not at loggerheads, as both want an orderly evolution of the yield curve.
The central bank has managed a borrowing programme of nearly Rs 13 lakh for the Indian government for the fiscal year ending March 31. Next year the borrowing programme of the government is pegged at Rs 12 lakh crore.
“There is no fight between the central bank and the bond market, I have said earlier as well that the relationship between the central bank and bond market participants need not be combative it should be cooperative,” Das said. “We are emphasising time and again that there should be orderly evolution of the yield curve and not a sudden spike in reaction to incoming numbers.”
Das added that the sudden spike in bond yields could distort the borrowing cost of the private sector and undermine India’s economic recovery.
“All that we are emphasising is that a smooth yield curve is very important because a disorderly curve will act as an impediment for growth and undermine the process of economic recovery not just in India but across the globe,” the governor said. “Bond yields are a reflection of the cost of borrowing for the private sector. That is why all global central banks are cognisant of this issue.”