Growth taking root after plunge in pandemic, says RBI governor

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Several macro indicators suggest that the economic recovery is now taking hold after the troughs hit during the pandemic, but for growth to be sustainable and reach its potential, private capital investment has to resume, the Reserve Bank Governor said on Tuesday.

RBI Governor Shaktikanta Das said the economy has the potential to grow at a reasonably high pace in the post-pandemic scenario, provided private capital investment resumes.

Despite many economists revising down their growth forecasts between 8.5% and 10% for the current fiscal, the central bank has not changed its forecast of 9.5% for the year so far.

Investment-ready banks

Addressing a banking function — which he said is his first since the pandemic begin in March 2020, the governor asked banks to be investment-ready when the investment cycle picks up, which the RBI feels to begin from the next fiscal.

It can be noted that since 2013, private capital has been missing from the economy and many are of the view that this should begin from mid-next fiscal.

Even though he took solace in the fast-improving balance sheets of banks, the governor said gross bad loans of banks have come down in the September quarter from the previous quarter.

Das also asked banks to improve their capital management process. Lauding the tech entrepreneurs, the governor said the country has emerged as a top performer in the startup landscape, attracting billions of foreign capital.