Economy going back to normal, uncertainties remain: RBI governor

MUMBAI: RBI governor

Shaktikanta Das

on Saturday said that the economy is showing signs of normalising in response to the staggered easing of restrictions and argued that the policy measures announced by RBI to counter the impact of Covid-19 appear to have worked so far.


Despite the easing, the governor said that it was uncertain when supply chains would be restored fully; how long it would take for demand conditions to normalise; and what kind of durable effects the pandemic would leave behind on potential growth.


In his address at the SBI Banking & Economics Conclave, Das urged private and public sector lenders to raise more capital, stating that recapitalisation of banks is “absolutely necessary” as bad loans could rise because of compression in growth.

Highlighting the policy measures taken by RBI, Das said that central bank has released additional liquidity to the tune of Rs 9.57 lakh crore (equivalent to about 4.7% of nominal GDP) since February 2020. But these countercyclical measures were not going to be permanent.

“Post containment of Covid-19, a very careful trajectory has to be followed in orderly unwinding of counter-cyclical regulatory measures and the financial sector should return to normal functioning without relying on the regulatory relaxations as the new norm,” said Das.

The governor said that banks were in a better shape in March this year compared to the previous year. However, this was not enough as once in hundred-year risk events were now taking place more than once a decade, he said.