There is no reason to cut the forecast for FY 2012

Despite fresh threats from rising COVID-19 cases, the Reserve Bank of India (RBI) chief maintained the central bank’s forecast for GDP growth at 10.5% in FY 2018.

Reserve Bank of India Governor Shaktikanta Das said on Thursday that the renewed increase in COVID-19 cases in many parts of India is a concern, this time around development will continue to be ‘unabated’.

He said that the Reserve Bank is ‘fully committed’ to use all policy tools for the economy’s strong recovery from the catastrophic effects of the epidemic.

“We have to keep in mind that this time compared to last year, we can say in March or April that we have some additional insurance against the impact of the COVID-19 epidemic,” The Times Network India Economic Address in Conclave 2021 ‘.

“The first thing is that the two vaccines being rolled out,” he said, adding that the roll-out speed was ‘very fast’ and about 5 crore people had already been vaccinated.

“The second aspect is that by and large, larger and larger ones are now used for the COVID-19 protocol. Therefore one would expect that those who have lowered their guard will drop their guard against the spread of COVID-19 [virus],” They said.

“And third, at this point … doesn’t do the kind of lockdown we experienced last year. Because last year, it came as a huge shock. This time we all know what an epidemic is, despite some New strains have evolved, ”he said.

‘preliminary analysis’

Mr. Das said, “The revival of economic activity that has taken place should continue to move forward and I do not support it [a downward revision], However I should not say this before the details are presented by our research teams. But my understanding and our preliminary analysis suggest that the 10.5% growth rate for the next year, which we had given, would not require downward revision. ”

Mr. Das said in response to a question on keeping the bond yields under control, “The relationship between the central bank and the bond market should not be combative, it has to be supported.” We are repeatedly emphasizing that there should be gradual development of the yield curve and that there should not be sudden spikes or a knee-jerk reaction for certain numbers. “

Mr. Das said that the borrowings of the government for the next year would remain in the same range as it was this year, Mr. Das said that the RBI would manage the borrowings and there should be no reduction in yields.

“A haphazard or haphazard yield curve will act as a barrier to growth. This will undermine the process of economic reform not only in India but in all other countries. Therefore, all central banks are worried. “Mr. Das said.

He said that bond yields are important because they are the benchmark for the cost of money for the private sector. “So we are emphasizing the gradual evolution of the yield curve,” he said.

Talking about the financial sector in the new decade, Mr. Das said that in the dynamic world of financial services, and after the epidemic, financial technologies (fintech) will challenge the financial sector with innovations.

“The use of fintech for customer services will effectively control costs and expand banking and non-banking businesses. The increasing use of digital payments brought by COVID-19 could increase digital lending in the current decade as companies accumulate consumer data and enhance credit analytics, ”he said.

“This, in turn, presents new and complex trade-offs. [among] Financial stability, competition and data security; Thereby warranting new regulatory frameworks and novel methods of monitoring. It is imperative for financial sector regulators to monitor global growth and formulate policy responses to risks and opportunities.