Indian economy to grow at 9.5 percent in FY22, don't see high inflation getting generalised: RBI Governor

RBI Governor Shaktikanta Das said on September 9, 2021 that the Indian economy is likely to grow at 9.5 percent in FY2021-22. He said that there are many fast indicators that show an uptick in economic activity.

While speaking at a media event,  RBI Governor said that the impact of the second wave of COVID-19 has waned by August and economic growth will be better from the second quarter onwards.

He said that the RBI has decided to place more emphasis on economic growth because of the pandemic and operate in the 2-6 percent inflation band set by the government.

The central bank will seek to gradually move towards achieving the 4 percent target over a period of time, he said, adding that the possibility of a sustained increase in inflation is unlikely.

Key Highlights 

•According to the RBI Governor, easy liquidity conditions in the global markets are among the conditions that are leading to a surge in markets domestically. He stated that there is no evidence of the high asset prices affecting the inflation situation.

•Speaking on continuing RBI's accommodative stance, he said that a call on that will be taken by the rate-setting panel of the RBI.

•He added that the apex bank does not see high inflation getting generalised.

•Das informed that the banking system's gross non-performing assets ratio stood at 7.5 percent at the end of June quarter and the same is manageable as of now.

•RBI Governor also conveyed its "serious and major concerns" about cryptocurrencies to the government. He said that the government will have to decide on how to deal with the proliferation of such platforms.

Background

The Reserve Bank of India (RBI) had earlier in August retained the real GDP growth forecast at 9.5 percent for the current financial year 2021-2022 during its Bi-monthly Monetary Policy Review.

RBI also decided to continue to maintain its accommodative stance and keep the repo rate unchanged at 4 percent and reverse repo rate at 3.35 percent. RBI Governor had also mentioned then that domestic economic activity has started normalising with the easing of the second wave of COVID-19 and phased reopening of the economy. 

Source: PTI