India Has Navigated Global Turbulence With Resilience Says RBI Governor

Mumbai: Amid global headwinds and contradictions, the Indian economy is sailing through smoothly, powered by buffers like strong macroeconomic fundamentals, stable financial system and resilient external sector, said the Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday.

Speaking on the theme Sailing Through Turbulence: India’s Tryst with Financial Stability at a media event, Das said, “India’s economic growth remains resilient; inflation is expected to moderate despite periodic humps; and the external sector is robust….the Indian economy has sailed well through the prolonged period of turbulence and exhibits resilience in the face of constantly emerging new challenges.”

The central bank chief however warned that the headwinds from geopolitical conflicts, geo-economic ragmentation, commodity price volatility and climate change continue to blow.

He said that the monetary policy has completed a full cycle in the last six years – an easing cycle during 2019-22 and a tightening cycle of equal magnitude thereafter.

“We have used the flexibility embedded in flexible inflation targeting (FIT) to prioritise growth or inflation depending upon the prevailing conditions and the outlook,” he said.

Das said looking ahead, the financial system will continue to face newer challenges. There is a continuing need for the financial sector entities to strengthen their levels and quality of capital, while further sharpening the risk management standards.

He said that the central bank is currently working on issues like the adoption of revised Basel III standards in a phased manner; issuance

of guidelines for Expected Credit Loss (ECL); liquidity coverage ratio (LCR); and prudential framework for financing of project loans. The central bank will also sortly issue the final guidelines for the Disclosure Framework on Climate-related Financial Risks, he said.

Meanwhile, Union Commerce Minister Piyush Goyal who also spoke at the event called for an interest rate cut in December policy, arguing the RBI should disregard food inflation when making its decision.

“RBI must cut interest rates. It’s a flawed theory to consider food inflation for making a choice on cutting rates. This is my personal view and not that of the Government,” Goyal said.

Responding to Goyal, Das said that he would like to reserve his comments on the rate action for the December 2024 monetary policy. “I

like to reserve my comments on rate action for December policy," said Das.