‘Decision to tweak policy rates depends on situation on ground’
Das said growth for FY23 is expected to be more than advance estimate of 7% on the back of economic momentum maintained in FY23 Q3 & Q4
NEW DELHI: Reserve Bank Governor Shaktikanta Das on Wednesday said the decision to tweak policy rates was not in his hand as he himself is driven by the situation on the ground.
In April, the Reserve Bank in a surprise move hit the pause button and decided to keep the key benchmark policy rate at 6.5 per cent. Prior to it, the RBI was on a rate hiking spree, raising the repo rate by 250 basis points since May 2022.
Speaking at an event organised by the industry chamber CII, Das said there is a suggestion that RBI will take a pause in the coming monetary policy meetings.
“It’s not in my hands. It all depends on the situation on the ground. I am driven by what’s happening on the ground. What is the outlook on ground? What are the trends? How is the inflation buildup or the inflation softening? So, it’s all there.
“So, it’s not a decision which is entirely in my hands, because I am driven by what’s happening at the ground level. So, to that extent, you know, I think I will leave it at that,” the Governor said.
The Governor further said retail inflation has moderated, but there is no room for complacency.
According to him, the next inflation print is expected to be lower than 4.7 per cent. The inflation based on the consumer price index was 4.7 in April.
Moreover, Reserve Bank Governor said the growth for 2022-23 is expected to be more than the advance estimate of 7 per cent on the back of economic momentum maintained in the third and fourth quarters of the last fiscal.
As per the second advance estimate released by the National Statistical Office (NSO) in February, the economy is estimated to grow at 7 per cent in 2022-23 against 8.7 per cent in the preceding fiscal.
“There is a possibility that it could be even more... it will not be a surprise if the GDP growth of last year comes slightly above 7 per cent,” he said at a CII event here.
Provisional Annual Estimates for the year 2022-23 will be released on May 31, 2023.
“It initially appeared in the third quarter that there was a pent-up demand which was supporting the economic activity, but all the economic indicators in the fourth quarter of last financial year show that economic activities sustained momentum.
“In fact, all the high-frequency indicators, around 70 of them, which we monitored in the Reserve Bank of India, almost in all of these high-frequency indicators, the momentum was maintained in the fourth quarter. So therefore, we should not be surprised if the growth is slightly more than 7 per cent,” he said.
Das also assured the gathering that the Indian banking system remains stable and resilient with strong capital, liquidity position and improving asset quality. “RBI will remain proactive and prudent, and will do its best to support the economy to maintain financial stability of India,” the Governor said.
He also informed the gathering that the RBI is fine-tuning the Central Bank Digital Currency (CBDC) architecture based on the experience so far.