RBI Governor Shaktikanta Das happy with Indian economy's recovery
What's the story
RBI Governor Shaktikanta Das is happy with the way the Indian economy is performing. On Thursday, he said that the pick-up in recovery has been stronger than expected. Much like the rest of the world, the coronavirus pandemic ripped the country's economy apart, leaving thousands jobless and pounded almost all sectors. After Das's remarks on recovery, the stock market reacted jubilantly. Here's more.
Statement
After sharp contraction, things looking great, indicated Das
Das was speaking at the Foreign Exchange Dealers' Association of India (FEDAI) where he expressed satisfaction at the trajectory taken by the Indian economy. "After witnessing a sharp contraction in the economy by 23.9% in Q1 and a multi-speed normalization of activity in Q2, the Indian economy has exhibited stronger than expected pick-up in momentum of recovery," Das said.
Coronavirus
Coronavirus crisis isn't over, Das stressed on maintaining demand
Though the recovery pleased him, Das was also wary of the rise in infections in some states. "Even as the growth outlook has improved, downside risks to growth continue due to recent surge in infections in parts of Europe and also in parts of India," he added. Meanwhile, it is extremely important to maintain demand, more so in the post-festive season, Das stated.
Change
He mentioned the changes India's economy witnessed in three decades
The Governor of the top bank said India witnessed a change in the last three decades — "from being a virtually closed economy to one that is globally connected and open to a much larger volume of international transactions and capital flows than before." He stressed inward FDI is allowed in most sectors. "Today, the capital account is convertible to a great extent," he added.
Quote
Capital account convertibility is a process: Das
"Capital account convertibility will continue to be approached as a process rather than an event, taking cognizance of prevalent macroeconomic conditions. A long-term vision with short and medium-term goals is the way ahead," said Das.
Market
Rupee made a small gain against US dollar
Buoyed by Das's remarks, S&P BSE Sensex added 0.4% to 43,998.48 by 1:37 pm today in Mumbai and NSE Nifty 50 Index also registered similar gains. This was significant as it helped in erasing earlier losses of the day. While the yield on the 10-year government bond declined to 5.88%, the rupee made a minute gain of 0.1% to Rs. 73.82 against the dollar.