Monetary Policy Should Remain Accommodative Says RBI Governor

The Reserve Bank Of India (RBI) Governor Shaktikanta Das noted in the minutes of the latest monetary policy meeting that economic activity and inflation developments over the past two months have been largely along the anticipated lines. The curve of active cases of COVID-19, which was on a downward trend till mid-February, has changed its course with a surge in several parts of the country. Experience of other countries suggest that this new surge can be more infectious due to several mutations of the virus. Rapidly rising cases of COVID-19 is the single biggest challenge to ongoing recovery in the Indian economy. In the domestic economy, there are clear signs of revival of growth. The agricultural sector has been resilient throughout the pandemic period. Manufacturing and services activities continue to normalise as reflected in key high frequency indicators such as mobility data; issuance of e-way bills; GST revenue; wholesale dispatches of automobile; registrations of passenger vehicles and construction equipment vehicles; rail and water cargo; highway toll collections; and electricity generation. He stated that the need of the hour is to effectively secure the economic recovery underway so that it becomes broad-based and durable. The renewed jump in COVID-19 infections in several parts of the country and the associated localised and regional lockdowns add uncertainty to the growth outlook. In such an environment, monetary policy should remain accommodative to support, nurture and consolidate the recovery.

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