Although inflation has moderated of late, India’s fight against it is not over yet, and there is no room for complacency, Shaktikanta Das, governor of the Reserve Bank of India (RBI), said at an event on Wednesday.
“The war on inflation is not over. We have to remain alert and there is no cause for complacency. We will have to see how El Nino plays out,” he said at the Confederation of Indian Industry Annual Session 2023.
Das added that the next print of retail inflation is expected to be lower than 4.7 per cent.
He also said that on the back of India’s economy performing well and the resilience of its banking system, the country’s gross domestic product (GDP) growth for 2022-23 (FY23) may come out to be more than 7 per cent. In FY24, India’s GDP is expected to grow 6.5 per cent.
“It will not be a surprise if GDP growth of last year comes slightly more than 7 per cent,” he said.
According to Das, India’s agriculture sector is doing well, and the central bank expects a normal monsoon. Moreover, the service sector has gained momentum. There is also evidence of private investment, especially in the cement and steel sectors.
However, geopolitical uncertainties, drag from merchandise exports, and the predictions of El Nino are some downsides.
Das said the Indian banking system remains stable and resilient with strong capital, liquidity positions and improving asset quality.
“We will ensure adequate availability of liquidity to meet production requirements of the economy,” he said.
As of December 31, 2022, the gross non-performing assets (GNPAs) in the Indian banks stood at 4.4 per cent.
Das said, “The unaudited figures as of March 31 are even lower. But we cannot reveal them before the audit.”
On the pause in rate hikes, Das said, “Please don’t read it as a pause. It’s a pivot”. He added that the decision does not lie in his hands alone.
“Pausing interest rate hike is not in my hands. It depends on the on-ground situation,” he said.
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