Greater reforms in labour sector and need to have enhanced investment in infrastructure will help achieve sustainable growth, says RBI Governor
Greater reforms in the labour sector and the need to have enhanced investment in infrastructure will help in achieving sustainable growth in the post pandemic era, Reserve Bank of India Shaktikanta Das said on Wednesday.
The central bank chief, who was addressing a convention organised by the All India Management Association (AIMA), listed sectors like healthcare education as well as digital and physical infrastructure which require greater investment.
This, he said, will help in ensuring not only growth but also facilitate employment generation.
"Our endeavour should be to ensure livable and sustainable growth in the post-pandemic future. Restoring the durability of private consumption, which has remained historically the mainstay of aggregate demand will be very crucial going forward," he observed.
Speaking on life after the pandemic, Mr Das said, “there are very few parallels of a shock like Covid-19 in history which left policymakers with no template to navigate through the crisis. Both health systems and human endeavour to deal with the crisis were stretched to the limit. The pandemic is likely to leave indelible mark on the way economies and societies function.”
Mr Das added that the pandemic has induced several structural changes like shift to work from home, due to which technology has gained potential to boost productivity by saving on travel time.
“As a result, consumption pattern is changing and companies are resetting their supply chains both globally as well as locally. These changes will have wider ramifications for the economy,” he noted.
Highlighting the need to bolster warehousing and supply chain infrastructure, which will be critical for enhancing productivity in the agriculture as well as horticulture sector, the RBI Governor said, “this will create employment opportunities in semi-urban and rural areas and promote inclusive growth. The demand for warehousing infrastructure has also gone up in tier-II and tier-III cities in the wake of steep jump in online trading.”
He also underlined the significance of a dynamic and resilient financial system, which he said, is at the root of a stronger economy.
“India's financial system has transformed rapidly to support the growing needs of the economy. While banks have been the primary channels of credit in the economy, recent trends suggest increasing role of non-bank funding channels…. This is a sign of a steadily maturing financial system – moving from a bank-dominated financial system to a hybrid one,” the central bank chief observed.