Reserve Bank of
India remains watchful and the monetary policy is actively disinflationary and
supporting growth, Governor Shaktikanta Das said on Thursday.
The government has
mandated the RBI to ensure that inflation based on the Consumer Price Index
(CPI) remains at 4 per cent with a margin of 2 per cent on either side.
At a symposium in
Tokyo, Das also talked about the central bank’s approach to the fintech
ecosystem, saying it is customer-centric.
There is a focus
on good governance, ensuring effective oversight, ethical conduct and risk
management, and encouraging self-regulation by the fintechs themselves through
a Self-Regulatory Organisation (SRO), he said.
Das said the
Monetary Policy Committee (MPC) in its October meeting projected CPI inflation
at 5.4 per cent for 2023-24, a moderation from 6.7 per cent in 2022-23.
The CPI inflation
fell to a three-month low of 5 per cent in September. The data for October is
scheduled to be released on November 13.
Headline
inflation, however, remains vulnerable to recurring and overlapping food price
shocks, Das said and added that core inflation has moderated by 170 basis
points since its recent peak in January 2023.
“In these
circumstances, monetary policy remains watchful and actively disinflationary to
progressively align inflation to the target, while supporting growth,” the
Governor said.
The MPC has left
the benchmark lending rate unchanged at 6.5 per cent and its next meeting is
scheduled in early December.
According to Das,
the Unified Payments Interface (UPI) has played a phenomenal role in the
fintech revolution in India.
Its success story
has in fact become an international model. Its ability to instantly transfer
money between bank accounts through mobile applications has transformed the way
people make digital transactions, he noted.
“Further, linking
of the UPI with fast payment systems of other countries is also being
undertaken. Linkage of fast payment systems of India and Japan may also be
explored to leverage the power of fintech and make cross-border payments more
efficient and less costly,” he said.
He was delivering
the keynote speech at the Symposium on Indian Economy 2023 organised by
Institute of Indian Economic Studies at the Tokyo Chamber of Commerce and
Industry at Tokyo in Japan.
Regarding the
performance of the Indian economy, Mr Das said it is “a matter of satisfaction”
that it has sailed through the turbulent waters smoothly during the recent
years.
“Driven by its
inherent dynamism and supported by a prudent policy mix, growth is getting a
stronger foothold while inflation is also coming under control. Our economic
performance also owes a lot to the very calibrated, focused and targeted
monetary and fiscal responses since the pandemic,” the Governor said.
However, he said in
the current uncertain environment, it is best to avoid any sense of
complacency.
“We remain agile
and continue to fortify our macroeconomic fundamentals and buffers. Today, the
confidence and trust in India’s prospects are at an all-time high,” he said.
To seize the
moment, Das said India looks at Japan as a close partner to usher in a new era
of growth and prosperity, for both countries.
“We will be
celebrating the festival of lights, Deepavali, in a few days in India. With
Japan as our close partner, I am sure the land of the rising sun will further
light up our spirits to take our economies and well-being of our people to
greater heights,” the Governor said.
Further, he said
the policy focus on strengthening macroeconomic fundamentals and continued
structural reforms have made India distinct in terms of growth outcomes.
This was reflected
in the rebound in GDP growth after the pandemic from a contraction of 5.8 per
cent in 2020-21 to an expansion of 9.1 per cent in 2021-22 and 7.2 per cent in
2022-23.
The GDP grew by
7.8 per cent in the first quarter of 2023-24 and the available high frequency
indicators suggest continuation of this momentum, Mr Das said.
For 2023-24, RBI
has projected real GDP growth at 6.5 per cent.
PTI
