RBI Governor says that economic growth sacrifice will be kept at tolerable level

13 Jul 2022 , 09:14 AM

Shaktikanta Das, governor of India’s central bank, stated that monetary policy is sensitive to the demands of the economy’s growth.

His remarks came during a fireside chat on Tuesday at an event hosted by the Singapore Indian Chamber of Commerce and Industry in the city-state as inflationary concerns and pressure on the Reserve Bank of India to tighten policy are growing due to rising global price pressures and a weaker currency.

Data released on Tuesday revealed that prices kept rising at rates that were higher than the central bank’s tolerance limit of 6%.
“We always account for the need for economic growth, and the growth sacrifice should be kept to a tolerable level,” Das said. The policy shouldn’t cause the economy to experience a “major slowdown.”

In two movements since May, the Reserve Bank of India has increased interest rates by a total of 90 basis points to 4.90% in an effort to battle pricing pressures, despite the fact that other global central banks’ aggressive tightening is increasing the likelihood of a recession. The next monetary policy review by the RBI is set for August 2—4, and policymakers are divided over how quickly to raise interest rates.
We are extremely aware of the growth tradeoff, he added.

In the year up to March 2023, the Indian government expects the economy to grow by as high as 8.5%, whilst the central bank predicts growth of 7.2%.

According to Das, as commodity prices decline, India’s inflation is expected to decline to below 6% in the final quarter of the fiscal year ending in March 2023. In the fiscal year that ends in March 2024, he expects price increases to revert to the middle of their objective range of 2% to 6%, or 4%.