RBI Governor Shaktikanta Das on Wednesday said the central bank’s report to the government for failing to meet the inflation target for the past nine months will not be available in the public domain immediately. He also said the RBI has prevented the complete collapse of the economy by keeping rates lower, and stayed away from premature tightening.
The Reserve Bank of India (RBI) has called a special meeting of its Monetary Policy Committee (MPC) on Thursday (November 3), to discuss its response to the government for failing to contain the retail inflation.
Speaking at the FICCI IBA Conference 2022, Das said, “The first right of receiving the letter (on failure to meet inflation) lies with the government… In due course, sooner than later, it will be out… The contents will be known.”
India’s retail inflation accelerated to a five-month high of 7.41 per cent in September. It was the ninth month that the Consumer Price Index (CPI)-based inflation has remained above the RBI’s upper tolerance limit of 6 per cent, and has risen despite the central bank’s efforts to curb it. The retail inflation had stood at 7.04 per cent in May, 7.01 per cent in June, 6.71 per cent in July, 7 per cent in August and now 7.41 per cent in September.
“We prevented a ‘complete collapse of the economy’ by keeping rates lower and stayed away from premature tightening,” Das said adding that acting early would have exerted costs to the economy and the people.
According to the Reserve Bank of India Act, 1934, where the central bank fails to meet the inflation target, it shall set out in a report to the central government –– (a) the reasons for failure to achieve the inflation target; (b) remedial actions proposed to be taken by the Bank; and (c) an estimate of the time period within which the inflation target shall be achieved pursuant to timely implementation of proposed remedial actions.
On the CBDC pilot launch, the RBI governor said it was a landmark moment in the history of finance in India. We want to iron out all aspects of CBDC before the final launch. The RBI hopes to launch the digitised Kisan Credit Card loans in a full-fledged manner by CY2023.
The RBI on Tuesday started the use of digital rupee or central bank digital currency in the wholesale segment on a pilot basis. The first day witnessed a total of 48 trades in government securities worth Rs 275 crore using the RBI’s CBDC.
On the economic situation, Das also said there is a regime shift in advanced economies. Emerging markets and developing economies (EMDEs) remain particularly vulnerable to the current financial conditions.
He also said the Indian economy is growing steadily, drawing strength from its macroeconomic fundamentals and buffers. “According to the IMF (International Monetary Fund), India is slated to be one of the fastest-growing major economies. We’re monitoring inflation trends. Our constant endeavour is to keep ‘Arjuna’s eye’ on inflation”
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