Monetary policy supporting growth and actively disinflationary: Shaktikanta Das

Mumbai: "Reserve Bank of India (RBI) remains watchful, and the monetary policy is actively disinflationary and supporting growth", RBI 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 percent with a margin of 2 percent on either side.

At a symposium in Tokyo, Shaktikanta Das 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 fin-techs themselves through a Self-Regulatory Organisation (SRO), he added.

MPC in October projected CPI inflation at 5.4 percent for 2023-24

Das said the Monetary Policy Committee (MPC) in its October meeting projected CPI inflation at 5.4 percent for 2023-24, a moderation from 6.7 percent in 2022-23. The CPI inflation fell to a three-month low of 5 percent in September. The data for October is scheduled to be released on November 13.

Inflation, however, remains vulnerable to recurring and overlapping food price shocks, and the 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 added.

The MPC has left the benchmark lending rate unchanged at 6.5 percent 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.

"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.

RBI has projected real GDP growth at 6.5 percent for 2023-24

The GDP grew by 7.8 percent in the first quarter of 2023-24 and the available high frequency indicators suggest continuation of this momentum, Das said. For 2023-24, RBI has projected real GDP growth at 6.5 percent, he added.

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.

To seize the moment, Das said that India looks at Japan as a close partner to usher in a new era of growth and prosperity, for both the countries.

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.

(With inputs from PTI)

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