Well-known economist Ashima Goyal has regained confidence in the Indian economy and said the economy is ready for a faster recovery from the pandemic downturn. 

“Despite the severe shock of Covid-19, India’s macroeconomics are healthier and more ready for rapid growth than before. Recovery from both the first and second waves is unique to the economy. It was faster than expected towards its strengths, “she said in an interview with PTI.

Several agencies have lowered India’s projected growth rate this year due to the effects of the second coronavirus wave. RBI estimates peg growth in 2010 to be 9.5%. First quarter GDP data will be released on August 31st.

Rajiv Kumar of NITIAayog also predicts a strong backlash against the backdrop of rapid immunization, infrastructure promotion and improved agricultural production through a good monsoon.

Goyal also talked about promoting new government infrastructure that has a positive impact on the economy.

“But we shouldn’t expect a private infrastructure investment boom in the 2000s,” said Goyal, a member of the Reserve Bank’s Monetary Policy Committee (MPC), while many Indian start-ups are doing well. ..

“The influx of portfolios into India is not only due to the quantitative easing of central banks in developed countries, but also to India’s growth prospects. Not all emerging markets get such inflows.” A prominent economist gave his opinion.

“In addition, India has enough reserves to survive volatility, ensuring that interest rates are in line with the domestic policy cycle,” she said.

Regarding the stock market boom during the period of slowing economic growth, Mr Goyal said the stock market was positive and usually ahead of the real economy.

“Low interest rates also increase the present discounted value of future earnings and make fixed deposits less attractive. A wider range of Indians are beginning to enter the stock market, offering a more diverse asset portfolio.” She said.

Goyal observed that different types of investors would make the market more stable and less volatile, saying, “A gradual rise in the policy rate is positive for the market, leaving a long-term growth outlook. If it is accompanied by a recovery in growth, it does not have to lead to a major revision. ” good. ”

In a recent call for the use of huge foreign exchange reserves to develop infrastructure and recapitalize public sector banks, economists said India’s foreign exchange reserves were not obtained by exports beyond imports.

“They are borrowing reserves built up from foreign inflows that generate debt. Reserves must be kept in liquid form and their capital value must be maintained in order to meet their repayment obligations,” she said. Told.

According to Goyal, the best way to prevent the accumulation of excess reserves is to increase the absorption of foreign inflows in productive investment.

“Until this happens, market-based capital flow management tools can be used to mitigate inflows. Better international regulation and the promotion of safety nets also need to continue,” she said.

In response to RBI’s proposed digital currency question, Goyal said that a well-designed digital currency has many advantages.

“It is built on India’s exemplary innovations in payment systems, facilitating cross-border flow, reducing costs, and working with banks on transparency, financial inclusion, and monetary policy transmission. It could improve, “she said.

Regarding the Asset Monetization Pipeline Program, Goyal said it was a great and innovative addition to the toolkit for funding new infrastructure.

She pointed out that private participation is easy because there is no risk to the project. The risks of a project are the most awkward for private players.

“But PPP contracts need a delicate balance between government revenues, private interests, and reasonable user rates. Appropriate regulation is a prerequisite for ensuring the latter,” she said. Warned.

Asked if high CPI and WPI inflation is a concern, she said inflation is currently within acceptable limits.

“The signs of sustainability are limited, mainly due to global and domestic supply-side bottlenecks related to Covid-19, if the government takes complementary supply-side actions. It must be temporary, “she said.

On what else the RBI can do to help the economy recover, prominent economists say the RBI has done a lot through timely but temporary measures to limit long-term addiction and dangerous behavior. Told.

According to her, some measures have already been reversed.

“A targeted liquidity program that ensures liquidity is pervasive in every corner of the economy should continue.

“Further normalization needs to be done slowly and gradually, subject to recovery, in order to fix inflation expectations, sustain growth and ensure financial stability,” he said.

Asked what financial measures are needed to support needy households, Goyal said the budget deficit is already double-digit and interest payments make up the largest part of income. rice field.

“Given the very large population, advanced economic protection transfers would require raising the deficit to 50% of GDP, which is not feasible,” she said.

She points out that funds must be used with great care, and while free food helps very poor and disabled people, the most targeted support for most households in need is health. , Said to increase job availability and capacity through better support for training and education. ..

“Focusing on infrastructure is also helpful because it creates jobs now and makes it easier to work later,” she said.

(With input from PTI)