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Increased funding in infrastructure sector to drive growth, says RBI governor

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RBI Governor Shaktikanta Das says infrastructure investment will improve growth
Greater reforms in the labor sector and the need for increased investment in infrastructure will help achieve 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 organized by the All India Management Association (AIMA), listed sectors like health education as well as digital and physical infrastructure that require greater investment .
This, he said, will not only help ensure growth, but also facilitate job creation.
“Our effort should be to ensure viable and sustainable growth in the post-pandemic future. Restoring the sustainability of private consumption, which has historically remained the mainstay of aggregate demand, will be very crucial in the future,” he said. he observed.
Speaking on life after the pandemic, Mr Das said: “There are very few parallels with a shock like Covid-19 in history that has left policymakers with no model for weathering the crisis. Health systems and human efforts to cope with the crisis have been overwhelmed. The pandemic is likely to leave an indelible mark on the functioning of economies and societies. “
Mr Das added that the pandemic has brought about several structural changes like the shift to working from home, whereby technology has gained potential to increase productivity by saving on travel time.
“As a result, consumption patterns are changing and companies are resetting their supply chains both globally and locally. These changes will have wider ramifications for the economy, ”he noted.
Emphasizing the need to strengthen warehousing and supply chain infrastructure, which will be critical to improving productivity in the agriculture and horticulture sectors, the RBI Governor said: “This will create opportunities employment in semi-urban and rural areas and promote inclusive growth. The demand for warehousing infrastructure has also increased in Tier II and Tier III cities following a sharp increase in e-commerce. “
He also stressed the importance of a vibrant and resilient financial system, which he believes is the basis of a stronger economy.
“The Indian financial system has transformed rapidly to meet the growing needs of the economy. While banks have been the main channels of credit in the economy, recent trends suggest an increasing role of non-bank funding channels…. This is a sign of a constantly evolving financial system – moving from a financial system dominated by banks to a hybrid system, ”observed the head of the central bank.