Stating that growth impulses and the fast-moving indicators are strong, Reserve Bank Governor Shaktikanta Das on Wednesday exuded confidence of the economy clipping at the projected 9.5 per cent this fiscal.
Giving all the credit for the faster-than-expected recovery of the economy to the government, Das said the central bank has only been supporting the government in reviving the economy ravaged by the pandemic.
Citing a slew of measures the government has taken since the pandemic struck in March 2020, the governor specifically mentioned tax cuts on fuels, tax resolution for the telecom sector, annulling of the retro tax legislation, sale of Air India, plans to sell some of the public sector banks and PLI scheme as the major reforms and growth-drivers bearing fruits now.
“Though soaring global crude prices and many geopolitical issues along with other global headwinds are challenges to growth, the overall growth outlook is very positive for us. I am very confident that our GDP will comfortably grow by 9.5 per cent this fiscal because all growth impulses are very strong, and the fast-moving indicators are stronger.
“Our assessment is that we are on a path of reaching the 9.5 per cent growth comfortably,” Das said at a function organised by financial daily Business Standard here this evening.
But there are global headwinds as advanced economies, which have recovered faster from the pandemic and had posted higher growth numbers earlier, seem to have moderated now, he noted, putting question marks on the 5.9 per cent global GDP forecast.
Given all these global GDP may undershoot the 5.9 per cent target due to shortages of semiconductors, shipping containers, and the resultant soaring freight rates, among others.
But on top of all these is that many European, Asian and American countries are still fighting the pandemic, Das said, warning “this should ensure that there is no room for complacency at all”.
He also based his growth optimism on the indications coming in from bankers that investment loans are making a slow come back and will pick up steam from the next fiscal.
Our recent interaction with bank CEOs make me confident that demand for investment capital is making a slow come back and should gather momentum from the next fiscal, he said, when asked whether he is worried that for the first time retail loan book at Rs 28.58 lakh crore – driven largely by home loans – has surpassed corporate loan book of Rs 28.28 lakh crore as of July this year.
Loans will go where there is demand. As of now, there is great demand for housing loans for one as we are now, in the lowest interest rate regime and ample liquidity, and for another, many people are looking for more spacious homes due to the pandemic, he said.
So it is up to banks to do risk pricing very carefully in terms of sectoral allocation of their assets. Each bank has to do its due diligence and determine the risk appetite, Das noted, parrying a direct answer to the question of whether he sees any bubble in the retail books.