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Economic recovery not yet fully entrenched, RBI battle ready to support growth: Das
Sep-17-2020

RBI Governor Shaktikanta Das has said that economic recovery is not yet fully entrenched and that the central bank is battle ready to take appropriate measures to support growth. He stated that India's economy has suffered its worst slump on record in April-June quarter of current fiscal year (Q1FY21), with the GDP contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. Nevertheless, he noted that high frequency indicators of agricultural activity, the purchasing managers' index that is PMI for manufacturing and certain private estimates on unemployment point to some stabilisation of economic activity in the second quarter of the current year, while of course contractions in several other sectors are also simultaneously easing.

However, Das said that the economic recovery was not yet fully entrenched and also that the recovery is likely to be gradual. He said the recovery is, however, not yet fully entrenched and moreover, in some sectors, the uptick, which was noticed in June and July they appear to have levelled off. It also said by all indications the recovery is likely to be gradual as efforts towards the reopening of the economy are confronted with rising infections.

At the same time, RBI Governor assured the industry that the RBI stands battle ready and whatever measures are required will be taken to support liquidity, growth and control price rise. According to him, the immediate policy response to COVID-19 in the country has been to prioritise the stabilisation of the economy and support quick recovery policies for durable and sustainable high growth in the medium term post the coronavirus. Besides, he said financial market conditions in India have eased significantly across segments in response to the front-loaded cuts in the policy repo rate and large system-wide as well as targeted infusion of liquidity by the central bank. 

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