Disconnect between financial markets and real sector growing: RBI report

Report says despite broad stability in financial markets, pandemic could amplify financial vulnerabilities, including corporate and household debt burden in the case of severe economic contraction

Some segments of the financial markets may have moved faster than economic realities suggest, thanks to the stimulus measures taken by global central banks, and this may pose a challenge to financial stability.

The Financial Stability Report (FSR), while warning about such concerns in a broad context, did not directly mention India, but the situation is not very different here. Perhaps that is why Reserve Bank of India (RBI) governor Shaktikanta Das emphasised this point. There has been a “growing disconnect between the movements in certain segments of financial markets and real sector activity,” Das wrote in his foreword to