RBI guv says economic recovery on track, asks banks to gear up for fresh investments

Reserve Bank of India (RBI) Governor Shaktikanta Das on Tuesday (November 16) sounded optimistic as he said the country can grow at a high pace post-pandemic, provided the private capital investment gains momentum.

Speaking at the SBI Banking & Economics Conclave 2021, Das said there are several indicators that suggest that economic recovery is on an upward trajectory. “Numerous high-frequency indicators suggest that economic recovery is now taking hold… While the economy is picking up, it is yet to cover a lot of ground before it gets broad-based and well-entrenched,” he said.

The RBI governor gave the example of India’s vaccines success as “a shining example of scientific capabilities” to suggest economic recovery is the only way forward.

On GDP growth, Das said several economists have revised growth forecasts between 8.5 and 10 per cent for the current financial year, but the central bank is firm on its forecast of 9.5 per cent for the year so far.

On the prospects of the banking sector, Das said they (banks) need to gear up for a fresh round of investments, which, he said, will start next fiscal. The governor said that private capital has been missing from the economy for almost a decade and expressed hope it would resume from the next financial year. He urged banks to improve their capital management process.

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Das said that India is a shining example of start-up success and gave the credit to tech entrepreneurs for attracting billions of foreign capital in this segment.

On cryptocurrency

Das stuck to his guns, reiterating his earlier stand that cryptocurrency is a threat to India’s financial stability and sought deeper discussions on the issue.

In the absence of any regulations, cryptocurrencies are practically operating in the country sans rules, often luring gullible investors with promises of high returns with zero accountability.

The Modi government may bring in a bill on cryptocurrencies during the upcoming winter session.