RBI Governor Shaktikanta Das emphasises on restoring inflation-growth balance
Restoring the inflation-growth balance is the most important task ahead of the Reserve Bank of India, Shaktikanta Das said on Tuesday in his swansong presser as RBI Governor.
“I am sure Team RBI, under the leadership of the new Governor (Sanjay Malhotra), will take it forward,” Das said.
Revenue Secretary Sanjay Malhotra has been appointed by the Government as the 26th Governor of RBI for three years. He will take charge tomorrow.
In his last bi-monthly monetary policy statement on December 6, Das emphasised that high inflation reduces the disposable income in the hands of consumers and dents private consumption, which negatively impacts the real Gross Domestic Product (GDP) growth.
“The increasing incidence of adverse weather events, heightened geopolitical uncertainties and financial market volatility pose upside risks to inflation. The MPC believes that only with durable price stability can strong foundations be secured for high growth.
“The MPC remains committed to restoring the inflation growth balance in the overall interest of the economy,” the Governor said.
Das said that high growth or slowing growth are impacted by a multiplicity of factors and not just the repo rate. Policy setting should not be looked at simplistically.
RBI Governor Shaktikanta Das during a press conference at the headquarters, in Mumbai, Tuesday
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“Our effort has been to make the monetary policy as appropriate as possible, keeping in mind the prevailing conditions and, more importantly, the overall outlook, what lies ahead.
“Within the MPC and RBI, i think, we are convinced that what we have done (holding the repo rate steady at 6.50 per cent) was the best option available under these circumstances,” the Governor said.
Das noted that in a changing world order, where the entire global geopolitical and geo-economic dynamics is undergoing fast change, it is always necessary to remain alert and agile. He expressed confidence that RBI will certainly do its best in this regard.
On cybersecurity
Referring to cybersecurity and its associated risks, the Governor observed that in the last six years and even earlier also RBI has given lot of attention to this issue and dealing with cybersecurity challenges. New challenges are emanating and that will be a challenge for every central bank, including RBI.
Emphasising that Central Bank Digital Currency (CBDC) as an area where among central banks RBI is a pioneer, Das said most of the central banks are talking about CBDC or experimenting with it. But actual launching of pilot project has been done by very few.
“CBDC has a huge potential in the coming years. In fact, it is the future of currency,” he said.
Similarly, the Unified Lending Interface (ULI) is a true game changer. “ULI will play a transformational role in credit delivery to the bottom of the pyramid. The ease of access, the speed and the simplicity of procedure are the unique characteristics of ULI,” Das said.
Outgoing Reserve Bank of India Governor Shaktikanta Das during his farewell at RBI headquarters, in Mumbai, on Tuesday
He emphasised that ULI’s benefits will get harnessed fully in the near future and there will be a nationwide rollout.
The Governor observed that many new innovative products have been launched under the overarching umbrella of the Unified Payments Interface (UPI) and they are producing excellent results. UPI today has emerged as global pioneer/ leader in payments systems.
“We have given a lot of attention to financial inclusion. It is again a continuing responsibility/ task. We cannot reach a stage of finality in that. The tasks and the work will have to continue,” Das said.
RBI-Govt relations
Das said the perspectives of the Finance Ministry and the central bank can vary/ differ at times. This happens world over.
“But during my tenure, I think, we have been able to resolve all issues through internal discussions. I would like to state emphatically that when a Governor comes, he looks at the wider economy from the RBI’s perspective and from the point of view of the mandate given to the central bank and how the mandate is going to be fulfilled.
“But while fulfilling that mandate, i can say with confidence and certainty, in the past, present and in the future, the Governors keep in mind the requirements of the wider economy…it is judgement call which every governor takes,” Das said.