The Reserve Bank of India Governor Shaktikanta Das stated in a speech at FICCI's National Executive Committee Meeting today that the immediate policy response to COVID in India has been to prioritize stabilization of the economy and support a quick recovery. While dealing with the immediate crisis management challenges, we need to strategically prepare for our combined overriding goal - the pursuit of strong and sustainable growth, he noted. The enabling policy environment would evolve around the initiatives taken by India's businesses to seize these opportunities and actualise the potential of the Indian economy as a rising economic power of the 21st century.
Financial market conditions in India have eased significantly across segments in response to the frontloaded cuts in the policy repo rate and large system-wide as well as targeted infusion of liquidity by the RBI. Despite substantial increase in the borrowing programme of the Government, persistently large surplus liquidity conditions have ensured non-disruptive mobilisation of resources at the lowest borrowing costs in a decade.
Although bank credit growth remains muted, scheduled commercial banks' investments in commercial paper, bonds, debentures and shares of corporate bodies in this year so far (up to August 28) increased by Rs 5,615 crore as against a decline of Rs 32,245 crore during the same period of last year. Moreover, the benign financing conditions and the substantial narrowing of spreads have spurred a record issuance of corporate bonds of close to Rs. 3.2 lakh crore during 2020-21 up to August.
The RBI Governor also highlighted five areas that will likely sustain India's growth in the medium-run. These areas are human capital, in particular education and health, productivity, exports, which is linked to raising India's role in the 4 global value chain, tourism and food processing and associated productivity gains.
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