Reserve Bank of India (RBI) Governor Shaktikanta Das has called for greater coordination among all countries to revive growth, while observing that the growth slowdown in India was not entirely due to global factors.
“What is important is coordinated action by all advanced and emerging economies to revive growth. I am not implying that the slowdown in India is entirely due to global factors. But it does impact the growth prospects of India,” he said at an event.
GDP growth slowed down to a 26-quarter low at 4.5% in the second quarter of the current fiscal. In its monetary policy meeting held earlier this month, RBI cut growth projections to 5% from 6.1% projected in October. “For emerging market countries like India, it is important that there is quick revival of growth. Therefore, there is a need for timely and coordinated action by all countries,” Mr. Das said.
Despite a forecast for lower growth, RBI held interest rates in December due to concerns on rising prices. The CPI inflation projection was revised upwards to 5.1-4.7% for the second half of 2019-20 and 4.0-3.8% for the first half of 2020-21.
“The relative emphasis between growth and inflation will depend on prevailing macroeconomic scenario, inflation and growth outlook and signals emerging from incoming data,” Mr. Das said. “We acted a little bit ahead of time in terms of reducing our policy rates. As early as February this year, the RBI saw that a momentum for slowdown was building up, so started cutting rates this year,” he added.