Reserve Bank of India Governor Shaktikanta Das stated on Wednesday that India's economy is on the mend. The central bank's MPC voted on Wednesday to keep the repo rate, or short-term lending rate, for commercial banks at 4%.
RBI Governor Das stated the Indian economy is "pretty well-positioned on the path of recovery" in a virtual address following the monetary policy meeting. "However, it cannot be immune to global spillovers or possible outbreaks of infections from new mutations, such as the Omicron variant," he said. "In these uncertain times, strengthening our macroeconomic fundamentals, making our financial markets and institutions resilient and sound, and putting in place credible and consistent policies will take precedence."
"At the same time, the return of Covid-19 waves around the world, including the appearance of the Omicron variation, tenacious inflation, and headwinds from continuing supply shortages cast a pall over the forecast." "Monetary policy is also reaching an inflection point, making financial markets jittery, given the developing growth-inflation dynamics across countries." Furthermore, given the economy's slack and the ongoing catching-up of activity, particularly private consumption, which is still below pre-pandemic levels, Das believes that continued policy support is necessary for a long-term and broad-based recovery. He said that economies are opening up around the world and that activity levels are returning to pre-pandemic levels.