India / Worst over, Indian economy will only move upwards: RBI Governor

New Delhi: India’s growth troubles appear to be over, and the economy—one of the hardest hit by the Covid-19 pandemic—will see a turnaround and move upwards from here, with the massive spending announced by the Centre, hoping to lift the economy out of one of the world’s worst disruptions caused by the pandemic, the Reserve Bank of India (RBI) Governor, Shaktikanta Das, said.

“The large capital expenditure announced by the government will support economic activity and investment. It is expected to crowd in private investment. From now on, the economy is expected to move only in one direction — that is, upwards,” Das told ET in an interview.

Worth mentioning here is that in its latest World Economic Outlook, the International Monetary Fund (IMF), in January, projected a robust 11.5 per cent growth rate for India in 2021, making the country the only major economy in the world to register double-digit growth this year amidst the coronavirus-triggered economic slump.

Plus, according to the Economic Survey for 2020-21, the economy is set to grow by 11 per cent in the financial year beginning in April, due to vaccine rollout and rebounding consumer demand. Last month, in its policy statement, the RBI forecast growth of 10.5 per cent for FY22, a notch below the government's 11 per cent prediction, but a sharp bounce back from the 7.7 per cent contraction in FY21.

Das went on to add that we need to be cautious about the renewed surge in Covid-19 cases, mentioning that “hopefully the surge in infections will get contained soon.”

The business daily quoted the RBI boss as saying, “This year we managed government borrowing in excess of Rs 13 lakh crore. Next year it’s about Rs 12 lakh crore, the net borrowing being Rs 9 lakh crore. We did open market operations of Rs 3 lakh crore this year, we will do equal or more next year depending on the situation…”

He said that the central bank will continue to aid the market to function smoothly while ensuring that the Centre and states’ borrowing programmes should not face headwinds.

Clarifying the banking regulator stance on Bitcoin, the RBI chief said that the use of “blockchain technology has several positive aspects that need to be exploited”. However, cryptocurrencies such as Bitcoins that are traded, the central bank has raised many concerns.

Meanwhile, RBI Deputy Governor BP Kanungo had last month said an internal committee of the apex bank was examining the model of its proposed digital currency and would come out with its decision “very soon”.