RBI to take measures to enable robust growth
Shaktikanta Das says inflation is among the key challenges for India's economy.
Gandhinagar - Chambers representatives urge monetary policy committee to cut key lending rate
Published: Sat 19 Jan 2019, 5:06 PM
Last updated: Sat 19 Jan 2019, 7:09 PM
Giving an indication of his likely approach ahead of the RBI's final monetary policy review of the fiscal year next month, new central bank governor Shaktikanta Das has said the Reserve Bank of India will make all efforts to maintain financial stability and "to facilitate enabling conditions for sustainable and robust growth".
Addressing an investors' round table at the Vibrant Gujarat Global Summit 2019 here, the RBI governor also reiterated that the central bank is committed to its mandate of containing inflation, while keeping in mind the need to promote growth.
At a meeting with Das in Mumbai, leading industry chambers' representatives urged that the RBI's monetary policy committee cut the central bank's key lending rate at its review meeting on February 7, pointing out that the inflation rate has been consistently low over a number of months.
"We will take necessary steps to maintain financial stability and to facilitate enabling conditions for sustainable and robust growth," he said. "We are committed to play our role as the monetary authority for maintaining mandated price stability objective while keeping in mind the objective of growth."
Listing inflation as among the key challenges, Das said that although headline inflation has moderated, inflation in food, fuel and non-food and fuel items are showing wide divergences.
"While food inflation has turned negative since October 2018 and fuel inflation has been highly volatile, inflation excluding food and fuel remains sticky at close to 6 per cent. Such wide divergences and large volatilities in inflation across major groups pose challenges for inflation assessment," he said.
Last month's appointment of Das, who retired earlier as economic affairs secretary, was preceded by the abrupt resignation of Urjit Patel, following a period of tension between the government and the central bank.
The government's differences with the RBI centred on four issues - the former wanted liquidity support to head off any credit freeze risk, a relaxation in capital requirements for lenders, relaxing the prompt corrective action rules for banks struggling with accumulated non-performing assets (NPAs or bad loans) and support for MSMEs.