With additional boost coming from the festival fervour and pent-up demand, numerous high-frequency indicators suggest that “economic recovery is taking hold”, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Tuesday.
While it is heartening to note that the economy is gradually getting back on its feet after a devastating second wave of the Covid pandemic, recovery has progressed in an uneven manner, he said. “Contact-intensive services are still to regain the lost capacity despite rapid improvement in the recent period,” Das said at the SBI banking conclave.
According to Das, there are signs that consumption demand triggered by the festive season is making a strong comeback. “This would encourage firms to expand capacity and boost employment and investment amidst congenial financial conditions,” he said.
Leading indicators of investment like production and import of capital goods are higher than pre-pandemic level in September 2021. The recent cut in excise duty on petrol and diesel by the Central government and in value-added tax (VAT) by several states will augment purchasing power of people, which, in turn, will create space for additional consumption. “Are we at the cusp of a virtuous feedback loop where increased demand impulses will move in lockstep with commensurate supply response and ensure sustained growth of the economy? There are reasons to be optimistic on this front,” he said.
“The Q1:2021-22 data on GDP revealed that there still exists significant gap in both private consumption and investment, relative to their pre-pandemic levels in 2019-20. So, while the economy is picking up pace, it is yet to cover a lot of ground before it gets broad-based and entrenched,” he said. This points to the need for sustained impetus so that growth could return to, or better still, exceed pre-pandemic trend, he said.
“I firmly believe that India has the potential to grow at a reasonably high pace in the post-pandemic scenario. Several factors are stacked in India’s favour,” he said.
Additions to FATF monitoring list
Mumbai: The Financial Action Task Force (FATF) has added Jordan, Mali and Turkey to the list of jurisdictions under increased monitoring for strategic Anti-Money Laundering and Combating of Financing of Terrorism deficiencies, the RBI said in a statement. —ENS