The country's economy is entering a decisive phase in the fight against the coronavirus pandemic and "silver linings are visible in flattening of active Covid-19 cases across the country", RBI Governor Shaktikanta Das said on Friday. With "deep contractions" of April-June now behind, "the mood of the nation has shifted from despair to confidence and hope", the RBI chief said while addressing the media at the end of a scheduled review by its newly-constituted monetary policy panel. Mr Das exuded confidence that barring a second wave, the country "stands poised to shrug off the deathly effect of the virus and renew its tryst with the pre-COVID growth trajectory".
The economy has been worst hit by the pandemic among major countries amid a continued rises in new infections, but the RBI Governor said there are encouraging signs of a business turnaround, and activity could return to growth in the January-March quarter.
The RBI sees India's real GDP contracting by 9.5 per cent in the current fiscal year, Mr Das said. "The MPC is of the view that revival of the economy from an unprecedented COVID-19 pandemic assumes the highest priority in the conduct of monetary policy," he said.
Several indicators point to the return of economic activity in the country, with the rural economy looking resilient, and food grain production set to hit new records following a good monsoon, he said.
Mr Das also said a renewed rise in infections remains a serious risk, but said factories and cities were slowly returning to normal while consumers were turning more upbeat.
The Reserve Bank of India left key interest rates unchanged on Friday, as widely expected by economists, and kept the key policy rates unchanged citing elevated inflation. It decided to continue with an "accommodative" stance of policy, which rules out any hikes for now, to help pull the coronavirus-ravaged economy out of its worst slump in four decades.
Economists said the status quo on key policy rates was on the expected lines. Consumer inflation - or the rate of increase in retail prices of a basket of items - was at 6.69 per cent in August, staying well above the RBI's medium-term target range of 2-6 per cent for a fifth straight month amid supply disruptions.
Asia's third-largest economy was already facing a cyclical downturn before the pandemic and is now expected to mark its first full-year contraction since 1979 as millions are left unemployed.
India has 6.84 million coronavirus cases, the second highest in the world, and the number of deaths in the country has surged past 1,00,000, the third highest after the US and Brazil.
"In cities, traffic intensity is rising rapidly; online commerce is booming; and people are getting back to offices," the RBI Governor said. "The mood of the nation has shifted from fear and despair to confidence and hope."
"Against all odds, we shall strive and revive. Thank you. Stay safe and stay well," Mr Das said at the end of his address.