RBI optimistic of economic revival, enlists areas to spur growth

Tribune News Service

New Delhi, September 16

Reserve Bank of India (RBI) Governor Shaktikanta Das sought to project an optimistic outlook for the economy in his address to an industrial chamber after the GDP for the first quarter recorded a minus 24 crash.

Predicting a gradual recovery as against a “V” shaped bounce-back being suggested by economists close to the government, Das said in the medium-term, India needed to focus on five areas – human capital in education and health, productivity, exports, tourism and food processing.

The sunrise sectors that offer potential for higher exports in the post-Covid period are drugs and pharmaceuticals.

“A sharp policy focus on other global value chain intensive network products, including equipment for IT hardware, electrical appliances, electronics, telecommunications, and automobiles would also provide the cutting edge to India’s export strategy with considerable scope for higher value additions,” he added.

India also needed to move up on the global agriculture value chain. Despite being one of the largest food producers, its position in the global value chain is quite low. Tourism and hospitality sector had been impacted more by Covid but expressed hope for early revival.

“Tourism as an engine of growth and pent up demand could drive a V-shaped recovery. Employment elasticity for the tourism sector is also quite high,” added Das.

He said that the immediate policy response to Covid was to stabilise the economy and support a quick recovery.

“The RBI stands battle-ready to fight the economic downturn and industry appreciates this and stands alongside in this joint battle,” noted FICCI president Sangita Reddy. 

“But a lot more support is needed to rebuild businesses, especially in the hard-hit sectors like tourism, aviation, hospitality, retail and healthcare,” she added.

“Credit off-take by the MSMEs under the Emergency Credit Line Guarantee Scheme (ECLGS) can be considerably increased by making the scheme simpler and expanding its coverage,” she said.