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The right balance

RBI chief Shaktikanta Das (Photo: Bloomberg)Premium
RBI chief Shaktikanta Das (Photo: Bloomberg)

GDP data for the second quarter, soon to be released, is expected to show a far smaller contraction than in the first but still place India in a technical recession. With hope, our covid crisis will prove to be just a short-lived setback to the emergence of our economy

Reserve Bank of India governor Shaktikanta Das’s comments at a foreign exchange dealers’ conference seem to convey an appropriate balance of optimism and caution. Das said the Indian economy has exhibited a stronger recovery than expected. But risks still loom on account of a recent surge in covid infections, and questions persist over the sustainability of consumer demand once festive-season spending is over.

With several ground-level parameters showing positive readings, it’s easy for regulators to get carried away and paint an overly optimistic picture. Yet it always pays to retain some scepticism. While our economy may indeed have fared better in the second quarter of 2020-21 than the first, a Mint Macro Tracker analysis shows the third quarter didn’t start off that well, with performance metrics dipping in October. This suggests an uneven effect of the pandemic. Gross domestic product data for the second quarter, soon to be released, is expected to show a far smaller contraction than in the first but still place India in a technical recession. With hope, our covid crisis will prove to be just a short-lived setback to the emergence of our economy.

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