MUMBAI: The Indian economy has shown a stronger rebound in recovery momentum than expected, said Reserve Bank of India governor Shaktikanta das Thursday.
Addressing the 4th Annual Day of the Foreign Exchange Traders Association of India (FEDAI), he cited a normalization of activity at various speeds in Q2FY21, after the country witnessed a sharp contraction in GDP from the 23.9% in Q1FY21.
“Even when the growth prospect has improved, downside risks to growth continue due to the recent surge in infections in advanced economies and parts of India.
“We need to keep an eye on the sustainability of demand after the festivals and a possible reassessment of market expectations around the vaccine.”
In addition, he said that the monetary policy stance in October emphasized the need to see through temporary inflationary pressures and also maintain the accommodative stance at least during the current financial year and in the next financial year.
“A key source of resistance in recent months has been India’s comfortable external balance position supported by current account balances in surplus for two consecutive quarters, the resumption of portfolio capital inflows thanks to strong FDI inflows and the sustained accumulation of foreign exchange reserves, “he said.
“The government’s recent policy approach to enhancing India’s participation in global value chains, including through sector-specific production-linked incentives, can leverage India’s strong external balance position.”
.
