Reserve Bank of India (RBI) Governor Shaktikanta Das has said that the Indian economy is manifesting signs of economic recovery. He said that the green shoots of growth in the economy can be ascertained by the steady growth in project costs sanctioned by banks and financial institutions as well as increased investment in fixed assets by India Inc.
"The pick up has largely been due to a few mega projects where the cost of projects are above Rs 5,000 crore in areas like metros, airport projects, power sector and gas distribution," Das told the Hindu BusinessLine.
Das further said that the total cost of projects sanctioned by banks and financial institutions rose from around Rs 37,000 in Q4 of FY19 to nearly Rs 46,000 crore in Q1 of FY20 and to over Rs 80,000 crore in Q2.
However, the RBI chief said that it is important to wait for two quarters if the momentum of improvement in the economy can sustain before the apex bank arrives at a conclusion. Das added that it would be too early to just see a green shoot and draw an inference.
His comments come following India's GDP growth slipping to a 26-quarter low of 4.5% in the Q2 of FY20 (2019-20) which prompted RBI to sharply lower its growth forecast for FY20 to 5 per cent from 6.1 per cent earlier.
Talking about the corporate performance in the first half (April-September) of FY20 basis the unaudited half-yearly financial reports of over 1,500 manufacturing companies, Das told the news daily that when the RBI compared this performance with the year-ago period, it noted that the investment in fixed assets during the first half of FY20 accounted for 45.6% of the funds available with these corporations.
This means that the corporates had allocated 45.6% of their funds to fixed assets (comprising capital work-in-progress), as against 18.9% in the first-half of the previous fiscal year. This indicates an increase in fixed assets.
Talking about RBI's expectations from the government, Das stressed that the Modi regime has taken a lot of steps to boost the economic growth over the last four-five months.
"One would expect more measures coming from the government...some sort of counter-cyclical fiscal measures and continuation of the structural reform agenda which the government has undertaken," he stated.