Socrates, status quo and solutions: What Shaktikanta Das talked of at RBI's last policy review of 2020

The Reserve Bank of India maintained benchmark rates at the same levels — 4 per cent — in its policy meet today. Today's was the third meeting on run that the central bank chose to keep the rates unchanged.
The rate call comes amid inflation staying stubbornly high and signs appearing that growth is making a comeback. A holding of rates was widely expected by economists who are more interested in the central bank's stance on the current surfeit of liquidity in the markets.

Das made some important observations about the current economic situation, before closing his address with a quote from Socrates: "We can be bitter or we can be better. We will strive to be better."

Here is a summary of what all Governor Shaktikanta Das said today.

— GDP is now estimated to contract by 7.5% for FY21. The RBI had estimated GDP to contract by 9.5% in its assessment in October. Q3 growth seen at 1%; Q4 at 0.7%

— Persistent inflation has set limits on rate cuts. There is a small window manage supply in order to break the inflation spiral, more efforts needed to control supply-side inflation pressure.

— Corporate earnings show that demand is recovering and profit numbers are going up

— Recovery in rural demand is likely to materialise further in the wake of urban demand rising further

— Retail inflation seen at 6.8% in third quarter, at 5.8% for Q4 FY21, and 5.2-4.6% in H1 FY22.

— Das committed to do whatever is required to maintain stability of the financial sector. Near-term stability issued has been handled, he added.

— Bond issuances have strengthened for those with strong credit ratings

— Commercial and cooperative banks won't go for any dividend payout pertaining to FY20, Das said.

— Regarding NBFCs, he said a regulatory framework review is needed.

— RTGS system to be made 24X7 in next few days. From January onwards, the limit for contactless card transaction will be upped from Rs 2,000 to Rs 5,000 per transaction.

— A proposal was made to issue RBI digital payment security control directions for regulated entities

— A detailed regime for enhanced disclosure of customer complaints, monetary compensation for any kind of delay in redressal was also announced.

— The guidelines for the proposed Digital Payment Security Control are likely to be made public shortly, Das said.

— Positive economic impulses are up against a rise in infections in some areas

High-frequency indicators showed signs of economic activity picking up in October in the wake of festive action and inventory drawdown. Some of these positive signs tracked forward to November, even as there were indications that demand could be slowing down a bit.

Latest figures showed services sector falling slow marginally in November.

Be that as it may, the Finance ministry said in its monthly report for the month that the Indian economy is likely to do better in Q3 compared to the preceding quarter.

This V-shaped recovery has put the economy firmly on the path of recovery, the Monthly Economic Review for November said.