MUMBAI: The Indian economy is at the “doorstep of revival” and both the government and the Reserve Bank of India are maintaining an accommodative stance, according to the central bank’s governor Shaktikanta Das. An accommodative stance means being prepared to provide all the funds required to support growth. His statement comes a fortnight after he forecast that the economy would break out of contraction in the fourth quarter.
“Today, we in India are at the doorstep of the revival process after the impact of the pandemic. Many financial entities have already raised capital and others are planning and would do so in the coming months,” said Das. He said that the RBI has asked lenders to raise capital not just to strengthen their resilience to overcome stress but also to have enough to support growth and ensure that credit flow is maintained when the economy enters the revival phase.
He was speaking at the launch of veteran bureaucrat N K Singh’s autobiography ‘Portraits of Power’. Das recalled his interactions with Singh when the latter headed a panel to review the law on fiscal responsibility and budget management.
Responding to a question from HDFC chairman Deepak Parekh, Das said that at the moment, both fiscal and monetary policies are working in close symmetry despite the government already exceeding the combined deficit target. “The government has taken prudent and calibrated measures. These are aimed at providing support to the vulnerable sections of society and then provide certain kinds of relief to the other segments of industry and business — the micro, small and medium enterprises. The RBI is already in a monetary expansion mode. We have used instruments and tools which were never in the tool kit of the RBI and we are constantly trying to innovate,” he said.
In response to another question on financial sector reforms from Kotak Mahindra Bank MD & CEO Uday Kotak, Das said that today these have become ownership-agnostic. The RBI governor pointed out that the focus is on governance reforms — the functioning of the bank, its board, board committees and CEO.
“When we talk about reforms in banking, it is generally linked to ownership of banks or non-banks. In today’s context, after the global financial crisis, the issue of governance has become important.”