Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday said that despite a brighter outlook for the economy, downside risks to growth remain as Covid cases surge. The governor’s note of caution comes at a time many states are planning to reimpose local restrictions.
“After witnessing a sharp contraction in GDP by 23.9% in Q1:2020-21 and a multi-speed normalisation of activity in Q2, the Indian economy has exhibited stronger-than-expected pickup in momentum of recovery,” Das said at a foreign exchange dealers’ conference. Das added, “We need to be watchful about sustainability of demand after festivals and a possible reassessment of market expectations surrounding the vaccine. The monetary policy guidance in October emphasized the need to see through temporary inflation pressures and also maintain the accommodative stance at least during the current fiscal and into the next financial year.”