Mumbai, Aug. 5 -- RBI Governor Sanjay Malhotra on Wednesday said the rural economy and the agriculture sector have become more resilient over the years, helped by the growth of allied activities, improved irrigation, farm mechanisation and better crop varieties, which have reduced the impact of rainfall deficiencies.
"I think Indian economy, especially the agriculture sector, has demonstrated great resilience. The monsoon is still evolving... but it has been very resilient because of various measures... that the government has taken," Malhotra said during the post-monetary policy press conference.
He added that allied activities have helped rural households cushion income losses when agriculture faces stress.
"We have seen that if agriculture is not doing well, then the allied activities do better. The households are able to themselves adjust their own activities to generate income and offset some of the loss in incomes that we have seen," he said.
RBI Deputy Governor Poonam Gupta said data over the last 15 years show that the resilience of the rural economy has strengthened in multiple ways.
"We have seen that the overall economy has become very resilient, and that resilience extends to different sectors, particularly the agriculture sector and the rural economy," she said.
Gupta said agriculture and allied sectors have increasingly complemented each other, while a larger share of irrigated land has made the sector less vulnerable to rainfall deficiencies.
"If you look at some of the measures by the government, the share of area that is irrigated now is much larger, and it's a secular increase, which means though the rainfall deficiency and vagaries matter, they matter less than they used to in the past," she said.
She added that access to farm credit, mechanisation and improvements in crop and seed varieties have also strengthened the sector. "All in all, all of these measures indicate towards a well-doing rural economy and a very resilient agriculture sector," she added.
On the monetary policy, Malhotra said the RBI's decisions are guided by prevailing growth and inflation conditions rather than any "dovish" or "hawkish" bias. "We are neither dovish nor are we hawkish. We feel that this is the right policy rate for the given growth-inflation dynamics that we are in today," he said.
The Governor reiterated that the RBI's inflation target remains headline inflation. "Our target is headline. It is the headline inflation which is the target which has been given to us, and we'll continue to be guided by the headline inflation," he said.
Published by HT Digital Content Services with permission from Millennium Post.