Consumption demand making strong recovery: Shaktikanta Das

Governor of the Reserve Bank of India (RBI) Shaktikanta Das remarked on Tuesday that the festive season's consumption demand is making a strong recovery.

"There are signs that consumption demand generated by the Christmas season is making a strong recovery," he said at the seventh SBI Banking & Economics Conclave. "This would encourage businesses to expand capacity, increase employment, and invest in the face of favourable economic conditions." According to Das, the recent reductions in excise duty on gasoline and diesel by the Centre and in value-added tax (VAT) by various state governments will boost people's purchasing power, allowing for more spending.

Furthermore, he stated that while it is "heartening to notice" that the economy is gradually recovering after a disastrous second wave, the recovery has been uneven.

Despite recent improvements, contact-intensive services are still struggling to regain capacity. GDP data for Q1: 2021-22 shows that, compared to pre-pandemic levels in 2019-20, there is still a considerable disparity in both private consumption and investment. So, while the economy is gathering up speed, it still has a long way to go before becoming widespread and entrenched, he said. This emphasises the importance of maintaining momentum so that growth can return to, or even exceed, pre-pandemic levels. In addition, he believes that in the aftermath of the pandemic, India has the ability to grow at a reasonable rate.

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