MUMBAI, Aug 7:Reserve Bank Governor Shaktikanta
Das Wednesday said the economy is in the midst of a cyclical
slowdown and not a structural one, and exuded confidence of
growth reviving soon on the back of cheaper money and likely
more government measures.
He expressed confidence that the government will come
up with more measures to revive the sagging growth, which
dipped to a five-year low of 5.8 percent for the March quarter
and is widely expected to slip further in the June quarter.
At the same time, the MPC lowered its growth forecast
to 6.9 percent now from 7 percent it had projected in the June
policy but Das made it clear that downward revision is not
with a downward risks.
Das said according to the RBI’s understanding, “the
growth slowdown is not structural but cyclical,” and expects
growth to revive in the second half.
Speaking to reporters after the six-member MPC cut the
key rates by a steeper 0.35 bps to 5.4 percent in their fourth
consecutive action since February, Das expressed satisfaction
on transmission and hoped credit growth will also pick up soon
helping rev up the growth engine.
Das said with the deeper rate cut this time around,
the central bank expects more lending rate cuts by the banks
in the coming weeks and noted that the money markets have
fully absorbed the rate actions since February.
“The impact of monetary policy easing is expected to
help economic activity going forward,” he said.
Das also dismissed notions of carterlisation by banks
on holding onto high lending rates, pointing out that the
largest lender SBI has taken the lead last month and others
will follow soon.
He said government and RBI are taking all possible
measures in tandem to help push up the growth process. But he
was soon to assert that the MPC decision is independent.
It can be noted that a slew of industry leaders,
including engineering giant L&T chairman AM Naik and Godrej
Group chairman Adi Godrej have of late expressed
disappointment on the economy and called for more measures to
revive growth with faster decision making and ensuring
communal harmony.
Das said the central bank will ensure that there is
adequate liquidity in the system to help growth and also ruled
out a cut in the cash reserve ratio (CRR) at the moment.
Meanwhile, Das declined to voice RBI’s views on the
government idea of sovereign borrowing from abroad, saying it
conveys its views internally at the highest level.
On the crippled NBFC sector, he said the RBI endeavour
is to ensure that none of the systematically important NBFCs
fall by the wayside. (PTI)
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