‘5 dynamic shifts’ can shape our future: RBI
Calls for tapping changes for structural transformation
New Delhi, July 27: Telling India Inc “I dare you to dream” and saying “fortunes are shifting in favour of India’s farm sector”, RBI governor Shaktikanta Das assured industry on Monday the RBI was closely monitoring the economic situation and would not hesitate to take action, stressing the need to step up investment in the infrastructure sector to reignite growth hit by the Covid-19 crisis. Mr Das said five dynamic shifts had the potential to shape the future of the economy — fortunes shifting in favour of the farm sector, changing energy mix in favour of renewable, leveraging information and communication technology and startups, strengthening supply and value chains, and focusing on infrastructure as a growth multiplier.
The Reserve Bank of India governor Shaktikanta Das on Monday listed five major dynamic shifts that are underway in the Indian economy which “need to be converted into structural transformations” to yield sizable benefits and help the country as a leader in the league of nations.
In a virtual address to industry leaders, Das listed shifting fortunes in favour of the farm sector; changing energy mix in favour of renewables; leveraging information and communication technology (ICT) and start-ups to power growth; shifts in supply/value chains (both domestic and global); and infrastructure as dynamic shifts. He said that while these involve testing challenges, they offer significant rewards. He urged the Indian industry to play a pivotal role in what could be a silent revolution.
While addressing members of the CII National Council, Das assured them that the central bank was closely monitoring the economic situation and would not hesitate to take appropriate action.
“Shifting the terms of trade in favour of agriculture is the key to sustaining this dynamic change and generating positive supply responses in agriculture. Experience shows that in periods when terms of trade remained favourable to agriculture, the annual average growth in agricultural gross value added (GVA) exceeds 3 per cent. Hitherto, the main instrument has been minimum support prices, but the experience has been that price incentives have been costly, inefficient and even distortive. India has now reached a stage in which surplus management has become a major challenge. We need to move now to policy strategies that ensure a sustained increase in farmers’ income alongside reasonable food prices for consumers,” said Das
Referring to infrastructure, Das said that the gap on the infrastructure front remains large, making a strong case for stepping up investments in the sector to revive the economy. He
suggested high speed rail infrastructure projects connecting the length and breadth of the country as a long-term measure to strengthen the sector.
Das said a big push to certain targeted mega infrastructure projects can spur the economy. He said India would need around $4.5 trillion for investment in infrastructure by 2030, as per the Niti Aayog.
Observing that India has now become a power surplus country, exporting electricity to neighbouring nations, Das said the share of renewable energy in overall installed capacity has doubled to 23.4 per cent in March 2020 from 11.8 per cent in March 2015.
At the interactive session, HDFC Ltd chairman Deepak Parekh urged Das to not extend the sixmonth moratorium on term loans beyond August this year as it would hurt banks. Parekh reasoned that borrowers who have the capacity to pay are also not paying.