Below is the View on RBI Monetary Policy by B.S. Sivakumar, President & Key Leadership Team member, Kotak Mahindra Bank
“The economy has been showing strong signals of getting back to the pre-COVID normal conditions. The data until September 2020 on GST collections, toll tax collections, railway freight revenues, vehicle sales like entry level passenger cars & two wheelers as well as tractors indicates possible signs of return to almost normal levels.
RBI’s monetary policy announcements indicate the regulator’s intention to allow for ample liquidity in the economy and a push for businesses. The MPC has also taken care to ensure that there is something for all segments - from large corporate houses, banks, SMEs and exporters to the retail segment with easing of risk weights on housing finance in its bid to facilitate growth.
The timing couldn’t have been better. With an ample and widespread monsoon season that has just gone by, projections of a bumper harvest, the festival season just round the corner and a new-found energy among businesses and consumers to catch up for the lost time, there is an upsurge in demand with new requirements coming up to handle the new regime of doing business and living under the shadow of the pandemic.
With ample liquidity and focus on long-term funding options to tide over the possible near-term risks, the ball is now in the court of businesses to generate demand and create an environment where new jobs are created and lost jobs are reinstated so that the economy can get roles back to double digit growth within the next 18 months.”
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