Reserve Bank of India Governor Shaktikanta Das outlined 10 key points that he believed captured the essence of the latest Monetary Policy review unveiled on December 8. The Hindu presents a quick recap of his observations.
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- The years 2020 to 2023 will perhaps go down in history as a period of great volatility.
- India’s GDP growth remains resilient and robust as reflected in our projection of 7% growth for the current year.
- On the inflation front, the summer of 2022 is behind us. We have made significant progress in bringing down inflation. The steady decline in core inflation indicates that monetary policy is working. But don’t rush into any conclusion. Please wait for the next point.
- Moving forward, Inflation management cannot be on Autopilot. The future path is expected to be clouded by uncertain food prices. Consumer Price Inflation (CPI) data for November is expected to be high.
- The Monetary Policy Committee (MPC) will be highly alert to any signs of derailing of the ongoing disinflation process. Based on the evolving situation, the MPC will take appropriate action to reach the 4% inflation target.
- Liquidity will be actively managed, consistent with monetary policy.
- The balance sheet of the financial sector remains robust. Sectoral and institution-specific signs of stress are being proactively monitored and addressed. We do not wait for the house to catch fire and then act. Prudence at all times is our guiding philosophy.
- The Current Account Deficit (CAD) is expected to be modest and comfortably financed.
- The foreign exchange reserves at US $640 billion provide a strong buffer against global spillovers.
- The stability of the Indian rupee reflects the improving macroeconomic fundamentals of the Indian economy and its resilience in the face of formidable global tsunamis.
