RBI to focus on shielding economic growth while tackling inflation, says Shaktikanta Das | The Financial Express

RBI to focus on shielding economic growth while tackling inflation, says Shaktikanta Das

According to RBI’s assessment, inflation peaked in India at 7.79% in April, and is now on a downward track. However, it will not be a smooth slide for inflation on the way down, and there may be some bumps along the way.

RBI to focus on shielding economic growth while tackling inflation, says Shaktikanta Das
Despite the positive signs at the moment, there is no scope for complacency when it comes to dealing with rising prices

Tackling inflation while protecting economic growth is RBI’s top priority, said governor Shaktikanta Das. Inflation is a global phenomenon, and not just India but countries such as the US, UK and Germany are dealing with high inflation at the moment. According to RBI’s assessment, inflation peaked in India at 7.79% in April, and is now on a downward track. However, it will not be a smooth slide for inflation on the way down, and there may be some bumps along the way, Shaktikanta Das said in an interview with Zee Business. He emphasised that inflation in India may continue to ease as crude, food and commodity prices have softened.

In the first three months of the current fiscal, retail inflation in India remained above 7%. It eased to 6.71% in the month of July, and is expected to continue declining. While the IMF projects inflation at 8.7% for emerging markets (EMs) like India, RBI assesses that inflation in India peaked at 7.79% earlier this year, and it will continue to fall. According to the central bank’s assessment, inflation may fall to around 5% in the April-June quarter next year – below the RBI’s upper tolerance of 6%. However, Das said that despite the positive signs at the moment, there is no scope for complacency when it comes to dealing with rising prices.

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Talking about India’s growth rate, the RBI Governor said, “As far as India’s growth is concerned, I am very confident. We will keep monitoring it and take the necessary action as and when required,” he said adding that slowing world economy, global inflation, recession fears will  impact India, however, so far, the country is progressing well on this front. Note that India’s GDP grew 13.5% in the April-June quarter, according to data released by the National Statistical Office (NSO). The GDP number for July missed RBI’s estimates of 16% and Das said in the interview that the central bank was studying why the April to June GDP growth was lower than RBI’s projection.

Speaking on RBI MPC’s monetary policy decisions as of late, Shaktikanta Das reiterated that RBI is on the right track in terms of monetary policy. “There have been some opinions about RBI falling behind the curve, but I would say that we are well in sync with the current situation,” Das said. He refused to give any clue as to what the stance is regarding interest rate hikes going forward. However, the RBI chief did emphasise that global developments, domestic economic data will guide rate hikes. “When you cut rates, you can give some forward guidance on rate action, but in the present situation where there is so much uncertainty as situations are changing drastically everyday, it is a bit difficult to comment on what the MPC might decide on rate hikes,” Das added.

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The governor expressed confidence in India’s economic situation. He said that while global factors are fuelling inflation and negatively impacting growth, domestic factors are positive as India’s agriculture sector is doing good. There was excess rainfall in monsoon, and sowing area shortfall also contracted this year. Meanwhile, paddy cultivation shortfall has also halved. Industry, services sectors are performing well, and credit growth is also positive. All of this bodes well for India’s economic growth.

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First published on: 02-09-2022 at 16:01 IST