Governor Shaktikanta Das’ latest policy statement sees FY21 growth contracting by 9.5%, but also talks about the possibility of India renewing the “tryst with its pre-Covid growth trajectory”.
The Reserve Bank of India will unveil its monetary policy statement on October 9. The central bank is expected to hold rates for now, but what will be the broader signal from Mint Road?
Industry and experts say the latest measures will infuse liquidity into the system and help stabilise the economy which is reeling under the impact of Covid-19 pandemic.
Round II of RBI’s Covid-19 crisis measures was received by the Sensex and the Nifty 50 gaining 1,116 and 331 points each before closing 986 and 273 points higher from the previous day’s close.
A ₹1-lakh crore liquidity window, reduction in reverse repo rate, support for NBFCs, and relaxation of NPA classification norms are ways in which the RBI wants to keep the economic wheel turning.
The central bank has been quiet on its regular growth and inflation forecasts, citing the highly fluid circumstances, but it has given ample hints in its latest Monetary Policy report.
While directly mum on inflation and growth, the RBI’s latest monetary policy report warns that Covid-19 would impact economic activity in India through lockdowns and slowing global trade and growth.
Enhanced foreign investment limits in debt securities will be a boon for India, more so in the near term, as Covid-19 combating measures will drain government resources.
