Measures implemented by Reserve Bank of India (RBI) through the COVID-19 pandemic since March 2020 have contributed significantly in engineering the turnaround of the Indian economy in spite of the pandemic impact, Deputy Governor of the banking regulator in the country Michael Debabrata Patra has said.
Delivering the 18th C.D. Deshmukh Memorial Lecture on “RBI’s Pandemic Response: Stepping into Oblivion” organised virtually by the Southern Regional Centre, Hyderabad, of Council for Social Development (CSD) on Friday, he said India was now placed much better to face the future waves of the pandemic in the economic as well as health sector. C.D. Deshmukh was the first Indian Governor of RBI during 1943-49 period.
The RBI’s response starting from within a week of WHO declaring Covid-19 as the global pandemic in 2020 and its impending impact across the world had been passionate woven around self-belief and resilience of the Indian economy. Over 100 conventional and above the board measures had been initiated to structure the institutions and financial markets since March 27, 2020, Mr. Debabrata Patra responsible for monetary policy, financial markets, deposit insurance in RBI said.
Dwelling into the actions of banking regulator during the pandemic, he said the focus was on mitigation of sector-specific liquidity constraints as the economies contracted badly with the pandemic. The central bank had rushed to frontline to stabilise the sinking economy with various measures pumping in about ₹17.2 lakh crore into the system, which accounted for 8.7% of the GDP, he noted.
On the impact of RBI measures, its Deputy Governor said the full outcome was still unraveling with the overall state of the economy proving its efficacy. The country’s economy had decelerated in 2019-20 to lowest-ever after the global economic slump. The mobility of people and goods had dropped to all time low and unemployment peaked to highest level of 24% in Q1 of 2020-21 although the rural economy backed by agricultural activity provided some relief.
In Q2 of 2020-21, the economy remained in contraction but the borrowing costs were brought down to lowest level in 17 years. The second wave of the pandemic had dented the recovery of the economy but its impact was relatively lesser with exports providing silver lining and imports reaching the pre-pandemic level, he explained.
Summing up the RBI measures, Mr. Debabrata Patra said they would continue to strengthen the country’s economy as the pandemic continues to shape the economies around the world and termed them as helping the economy “step out of the oblivion”.
Earlier, in her introductory remarks, Chairperson of the managing committee of CSD Hyderabad Prof. Shantha Sinha said they were concerned about the loss of employment, closure of schools, forcing children into work (child labour), forcing child marriages and decline of income by 50% for a majority of families due to the pandemic impact. The pandemic had also delayed the financial inclusion of the under-privileged in the country, she noted.
