Rapidly rising COVID cases posing a biggest recovery hurdle: RBI Governor

New Delhi, Apr 23 (KNN) The Reserve Bank of India (RBI) Governor Shaktikanta Das has said that the rapidly rising cases of COVID-19 is the single biggest challenge to ongoing recovery in the Indian economy.

During the monetary policy meeting on Thursday, Das further said that learnings of the last one year should, however, help us in managing the crisis as it unfolds.

''The need of the hour is to effectively secure the economic recovery underway so that it becomes broad-based and durable. The renewed jump in COVID-19 infections in several parts of the country and the associated localised and regional lockdowns add uncertainty to the growth outlook,'' he added.

He further said that in such an environment, monetary policy should remain accommodative to support, nurture and consolidate the recovery.

''We need to continue to sustain the impulses of growth in the new financial year 2021-22. I vote to keep the policy rate unchanged and to continue with the accommodative stance as long as necessary to sustain growth on a durable basis, while ensuring that inflation remains within the target going forward,'' he said.

Mridul Saggar, Executive Director, RBI too said that the economic recovery can come under risk if this new wave of infections is not flattened soon.

''This is especially so as monetary and fiscal policies have already used most of their space to considerably limit loss of economic capital, though expansion of policy toolkits can still afford additional comfort,'' he added.

He also said that while the countrywide dispensation is still quite supportive of production activity, this can change if the virus spread, hitherto contained to few States, might transmit across the country. Learning effects on calibrating stringency of restrictions may keep economic costs of the second wave much lower than the first but still retard full normalisation by a quarter or two.

''Ramping up vaccination, testing and treatment holds the key to protecting economic recovery and health policies have become the first line of defence. Monetary and fiscal policies can only play a second fiddle,'' he said.