India's economic recovery now ‘taking hold’, confirms RBI governor
Das said that the recent cut in excise duty on petrol and diesel by the central government and in the value-added tax (VAT) by the several state governments will augment the purchasing power of the people, which, in turn, will create space for additional consumption.
Reserve Bank of India (RBI) governor Shaktikanta Das said on Tuesday the country's economic recovery is now finally taking hold after a tumultuous period marked by the coronavirus disease (Covid-19) pandemic, as currently suggested by numerous “high-frequency” indicators. The RBI governor's statement was backed by an article published by the central bank earlier this week, in which it pointed out that conducive monetary and credit conditionals, the global headwinds notwithstanding, are a few of the key reasons behind the path to a durable recovery of the Indian economy.
“I firmly believe that India has the potential to grow at a reasonably high pace in the post-pandemic scenario,” the RBI governor was quoted as saying today. “There are signs that consumer demand, triggered by the festive season, is making a strong comeback. This should encourage firms to expand capacity and boost employment and investment amid congenial financial conditions.”
Providing an example, Das said that the recent cut in excise duty on petrol and diesel by the Centre and in the value-added tax (VAT) by the several state governments will augment the purchasing power of the people, which, in turn, will create space for additional consumption.
He also said that India, with a scale of vaccination among the highest in the world, is poised to lead the fight against Covid-19. The article published in the RBI Bulletin of November 2021 had also pointed out that domestically, there have been several positives on the pandemic front, in terms of reduced infections and faster vaccinations. This sets the Indian economy, the article said, clearly distinct from the global situation, which is marred by supply disruptions, stubborn inflation, and surges of infections in various parts of the world.
The Indian equity markets scaled record highs multiple times during the first half of October 2021, buoyed by strengthening signs of recovery in economic activity, a strong demand outlook ahead of the festive season, and the Reserve Bank's announcement of the status quo in its policy repo rate alongside continued accommodative stance of monetary policy.
The markets, however, pared some of the gains in the second half of the month amidst accelerated profit bookings following mixed second-quarter corporate earnings results and concerns over stretched valuations.
(With inputs from agencies)