Reserve Bank Governor Shaktikanta Das has said that the second wave of covid-19 pandemic took a grievous toll on India, but the dented economic activity has started recovering from late-May. In a first, he flagged the rising data breaches and cyber attacks as a risk facing the economy, along with others like firming global commodity prices. He noted that the recovery that had commenced in the second half of 2020-21 was dented in April-May 2021, but with the wave of infections abating as rapidly as it had set in, economic activity has started to look up in late May and early June.
Das said the dent on balance sheets and performance of financial institutions in India have been much less than what was projected earlier, but was quick to add that a clearer picture will emerge as the effects of regulatory reliefs fully work their way through. He also said capital and liquidity buffers at financial institutions are ‘reasonably resilient’ to withstand any future shocks. He added that the financial system is on the front foot to aid recovery, but the priority is to maintain and preserve financial stability.
He further said domestic financial markets are also boosted by the strengthening signs of the pandemic's abatement, the growing pace and breadth of the vaccination drive and renewed hopes of the economy clawing back lost ground as it unlocks. He said ‘while the recovery is underway, new risks have emerged on the horizon and these include the still nascent and mending state of the upturn, vulnerable as it is to shocks and future waves of the pandemic; international commodity prices and inflationary pressures; global spillovers amid high uncertainty; and rising incidence of data breaches and cyber attacks’.