Reserve Bank of India (RBI) Governor Shaktikanta Das said on Thursday said that Indian economy had exhibited stronger-than-expected rebound in the last few months. However, he added, the country needs to be watchful of demand sustainability post the festive season.

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The Governor was addressing the Annual Day Programme of the Foreign Exchange Dealers' Association of India (FEDAI) on Thursday.

Talking about opening up after the stringent lockdowns in the wake of COVID-19 pandemic, the Governor added that calibrated opening up could supplement domestic savings and fund our growth requirements.

He said that comfortable external balance, current account surplus have brought comfort to the country, while the financial conditions in commercial papers and corporate bond markets deteriorated.

"While some operational constraints are inevitable, we have tried to ease the financial conditions within these considerations," the Governor further added.

Speaking about the Central Bank's approach over the last few years, he said that RBI has tried to increase interaction with financial market players to maintain orderly functioning of financial markets and mitigate any downside risks.

"I'm a believer that the consultative approach always adds depth to decision making," he added.

After seeing a sharp GDP contraction in Q1, Indian economy has exhibited a stronger than expected momentum in activity, he added, even as the growth outlook has improved, downside risks remain concerning surge in infections — which is why we need to stay watchful.

Speaking about the exemption of foreign investors to purchase Indian financial assets and vice versa, the Governor said, capital account convertibility will continue to be approached as a process rather an event. "Internationalization of financial markets can lower transaction costs with efficiency gains," he added in the context of capital account convertibility.

He said, only simple derivative products would be allowed for retail investors, while complex for the larger ones.

(Edited by : Abhishek Jha)

First Published:Nov 26, 2020 1:59 PM IST