Reserve Bank of India (RBI) Governor Shaktikanta Das expressed concern over the first quarter GDP numbers in the ongoing fiscal, which was pegged at 5 per cent, terming it as a “surprise”. However, the RBI governor said he was confident that the economy would recover following the host of measures undertaken by the government.
The RBI Governor said the numbers looked much worse because the central bank had projected the GDP to grow at 5.8 per cent. “I think almost everybody had projected not below 5.5 per cent or so, but the number 5 per cent is a surprise,” he told news agency PTI.
Das further said that the second-quarter growth of all advanced economies was lower than the first quarter so there was a deceleration.
In the face of an economic downturn, the RBI Governor said the central banking institution had been cutting rates in the past few months. The RBI slashed benchmark interest rate four times consecutively since January 2019. The central bank reduced the repo (short term lending) rate by 1.10 percentage points during the year.
“I think with the right measures taken, things should improve. It’s a positive trend that the government is responding very fast and I don’t think we have heard the last from the government with regard to dealing with the current economic situation … My expectation is that it will be a continuous process and they would definitely be dealing with other challenges,” Das said.
Among a slew of measures announced by the government in three dosages, one was a special window for real estate, export incentives, bank consolidation and sops for MSMEs and the automobile sector, which is one of the worst affected entities by the slowdown.
In its 2019 annual report, RBI had pointed out certain structural reforms. “I think one major thing would be agriculture marketing. Definitely, I would expect some action from the government with regard to reforms in agricultural marketing,” the Central bank governor said.
When questioned about estimating a timeframe for the revival of the economy, Das said it was difficult to predict as a host of issues were still playing out. “For example, the Saudi oil crisis was something totally unanticipated. The trade issue between two largest economies some statements here it appears that they are going on the brink but then they pull back…so much of uncertainty happening all around,” he said.
-with PTI inputs