Bhubaneswar:

The slowing of India’s economic growth to a 15-month low of 6.7 per cent in the April-June quarter was due to “lower” government spending in the wake of the enforcement of the model code of conduct for the recent Lok Sabha polls, RBI Governor Shaktikanta Das said on Saturday.

The RBI had projected a growth rate of 7.1 per cent for the April-June quarter of this fiscal.

“The Reserve Bank projected a growth rate of 7.1 per cent for the first quarter. However, the first advance estimation data released by the National Statistical Office showed the growth rate at 6.7 per cent,” Governor Das said.

The components and main drivers responsible for the GDP growth like consumption, investment, manufacturing, services and construction have registered a growth of more than 7 per cent, he said.

Only two aspects have pulled the growth rate slightly down. Those are—government (both central and state) expenditure and agriculture, the RBI governor pointed out.

He said the government expenditure was low during the first quarter perhaps due to elections (April to June) and operation of model code of conduct by the Election Commission.

“We would expect the government expenditure to pick up in coming quarters and provide the required support to growth,” Mr Das said.

Similarly, the agriculture sector has recorded a minimal growth rate of around 2 per cent in the April to June quarter. However, the monsoon was very good and spread all over India except a few areas. So, everyone is optimistic and positive about the agriculture sector, he noted.

“Under these circumstances, we have reasonably confident expectations that the annual growth rate of 7.2 per cent projected by the RBI will be materialized in coming quarters,” the governor asserted.

Das said that GST, inflation targeting framework and Insolvency & Bankruptcy Code (IBC) are the three major reforms made during the past 10 years.

Addressing a national conference of chartered accountants (CAs) here, he said, “The primary functioning of the RBI, as defined in its preamble, is to maintain price stability, while keeping in mind the objective of growth. This was a major structural reform made by the government in 2016 by amending the RBI Act.” With this amendment, the RBI is mandated by the law to maintain the price stability with keeping the inflation at 4 per cent, with a leeway of 2 percentage points on either side, he said.

When Covid hit, the RBI reduced the repo rate by 250 basis points. Similarly, after the Ukraine war started, due to various international factors and some domestic weather events, the inflation rose to 7.8 per cent. So, at that time, the central bank had quickly increased the interest rate, he pointed out.

Stating that quality of audit in any organization is very important Das advised the CAs to do a true diagnosis of the health of a company like doctors.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Reserve Bank of India (RBI) Governor Shaktikanta Das speaks at the Global Fintech Fest (GFF) 2024, in Mumbai on Friday.
| Photo Credit: ANI

The slowing of India’s economic growth to a 15-month low of 6.7% in the April-June quarter was due to “lower” government spending in the wake of the enforcement of the model code of conduct for the recent Lok Sabha polls, RBI Governor Shaktikanta Das said here on Saturday (August 31, 2024).

The RBI had projected a growth rate of 7.1% for the April-June quarter of this fiscal.

“The Reserve Bank projected a growth rate of 7.1% for the first quarter. However, the first advance estimation data released by the National Statistical Office showed the growth rate at 6.7%,” Mr. Das told reporters here.

The components and main drivers responsible for the GDP growth like consumption, investment, manufacturing, services and construction have registered a growth of more than 7%, he said.

Only two aspects have pulled the growth rate slightly down. Those are—government (both central and state) expenditure and agriculture, the RBI Governor pointed out.

He said the government expenditure was low during the first quarter perhaps due to elections (April to June) and operation of model code of conduct by the Election Commission.

“We would expect the government expenditure to pick up in coming quarters and provide the required support to growth,” Mr. Das said.

Similarly, the agriculture sector has recorded a minimal growth rate of around 2% in the April to June quarter. However, the monsoon was very good and spread all over India except a few areas. So, everyone is optimistic and positive about the agriculture sector, he noted.

“Under these circumstances, we have reasonably confident expectations that the annual growth rate of 7.2% projected by the RBI will be materialized in coming quarters,” the Governor asserted.

Reserve Bank Governor Shaktikanta Das on Monday (August 26, 2024) said the central bank is constantly working on policies, systems, and platforms to make the country’s financial sector strong, nimble and customer centric.

Addressing the RBI@90 Global Conference on ‘Digital Public Infrastructure and Emerging Technologies’, Mr. Das recalled various initiatives being taken by the RBI with regard to Unified Lending Interface (ULI) and Central Bank Digital Currency (CBDC).

The Governor also said that the UPI system has the potential to evolve into a cheaper and quicker alternative to the available channels of cross-border remittances and “a beginning can be made with small value personal remittances as it can be quickly implemented”.

According to the Economic Survey tabled in Parliament in July, remittances to India, the second largest source of external financing after service exports, are projected to grow at 3.7% to $124 billion in 2024 and at 4% to reach $129 billion in 2025.

Mr. Das said the Reserve Bank of India is looking forward to the journey towards RBI@100 with considerable optimism.

“We are constantly working on devising policies, approaches, systems and platforms that will make our financial sector stronger, nimble and customer centric,” he said.

Speaking on the theme of DPI and emerging technologies, he said over the last decade, the traditional banking system has undergone an unprecedented technological transformation.

By all indications, this process is likely to become even more intense in the coming years, he added.

He said DPI spurs market innovation by reducing transaction costs, democratising access, maintaining competition through interoperability, and attracting private capital.

Referring to the country’s experience, Mr. Das said “DPI has enabled India to achieve, in less than a decade, levels of financial inclusion that would have otherwise taken several decades or more”.

Digital Public Infrastructure refers to basic technology systems, created mainly in the public sector, which are openly available to users and other developers.

India’s DPI journey is a unique model, wherein the base technical infrastructure is built, operated and managed in the public sector, while the private sector accesses the DPI to create innovative customer facing services.

“The advantage of developing DPI in the public sector is that typically the private sector would be averse to capital investment to create infrastructure with uncertain returns,” the Governor said and added that privately created infrastructure may not also be amenable to democratised access or interoperability.

The Governor talked about India’s advancements in the field of digitalisation of the financial services.

He further said Unified Payments Interface (UPI), a real-time payment system, has emerged as a robust, cost-effective and portable retail payment system and is attracting active interest across the globe.

“Continuing on this journey of digitalisation of banking services, last year we launched the pilot of a technology platform which enables frictionless credit. From now on, we propose to call it the Unified Lending Interface (ULI),” he said.

The ULI platform facilitates seamless and consent-based flow of digital information, including land records of various states, from multiple data service providers to lenders. This cuts down the time taken for credit appraisal, especially for smaller and rural borrowers.

He said that by digitising access to the customer’s financial and non-financial data that otherwise resided in disparate silos, ULI is expected to cater to large unmet demand for credit across various sectors, particularly for agricultural and MSME borrowers.

Based on the experience from the pilot project, Mr. Das said a nationwide launch of the ULI will be done in due course.

“Just like UPI transformed the payments ecosystem, we expect that ULI will play a similar role in transforming the lending space in India. The ‘new trinity’ of JAM-UPI-ULI will be a revolutionary step forward in India’s digital infrastructure journey,” he said.

On artificial intelligence (AI) and DPI, Mr. Das said for customers, AI enables hyper-personalised products and faster, more relevant services, while for financial institutions like lenders there are benefits from advanced tools for risk and fraud management, streamlined operations, and reduced compliance costs.

“Such advancements, however, come with serious challenges. Data privacy concerns arise from handling vast volumes of personal information. Ethical AI governance is essential to ensure fairness and prevention of bias,” he said.

He further said AI technology can also be misused to spread misinformation, potentially causing severe damage and disruption to DPIs as well as other digital systems. They can also damage the reputation and operations of financial institutions.

“AI promises to make processes simpler and efficient. It can also emulate decision-making to a great extent. However, when it comes to the regulated financial institutions, there should be careful adoption of AI in critical decision-making segments, for example in loan sanctioning,” Mr. Das said.

Mr. Das also said with the emergence of fast payment systems across countries and experimentation around central bank digital currency (CBDC), new possibilities are opening up to bring in greater efficiency to cross-border payments.

Maximum efficiency gains in such initiatives would come from ensuring interoperability as a key design element, the Governor said.

New Delhi:

Prime Minister Narendra Modi has congratulated Reserve Bank of India Governor Shaktikanta Das on being rated “A+” for the second consecutive time in the ‘Global Finance Central Banker Report Cards 2024’.

The Reserve Bank of India today said, “Happy to announce that for the 2nd consecutive year, RBI Governor @DasShaktikanta has been rated “A+”, in the Global Finance Central Banker Report Cards 2024.” The RBI also shared a link to the report card.

Responding to the post on micro-blogging site X, PM Modi said, “Congratulations to RBI Governor Shri @DasShaktikanta for this feat, and that too for the second time”.

“This is a recognition of his leadership at the RBI and his work towards ensuring economic growth and stability,” said the Prime Minister.

The Global Finance magazine released the names of Central Bank Governors who earned the highest grades, “A+”, “A” or “A-“, in the ‘Central Banker Report Cards 2024’.

Congratulations to RBI Governor Shri @DasShaktikanta for this feat, and that too for the second time. This is a recognition of his leadership at the RBI and his work towards ensuring economic growth and stability. https://t.co/lzfogAQb15

— Narendra Modi (@narendramodi) August 21, 2024

The report, published annually since 1994, grades the central bank governors of nearly 100 key countries, territories and districts, as well as the European Union, the Eastern Caribbean Central Bank, the Bank of Central African States and the Central Bank of West African States.

Grades are based on success in areas such as inflation control, economic growth goals, currency stability and interest rate management.

“Central bankers have waged war against inflation over the past few years, wielding their primary weapon: higher interest rates. Now, countries around the world are witnessing the tangible results of these efforts, as inflation has dropped significantly,” said Joseph Giarraputo, Global Finance founder and editorial director.

In an exclusive interview to NDTV on Tuesday, Governor Das highlighted that banks need to carefully monitor the persistent gap between credit and deposit growth because it could become a challenge, leading to liquidity issues.

Governor Das said that the RBI is cautioning banks to monitor this situation carefully.

“Banks should also carefully monitor the change in investment strategies of young aspirational Indians,” Governor Das told NDTV Editor-in-Chief Sanjay Pugalia.

He further mentioned that a decision on reducing the key policy repo rate will depend on keeping inflation in check and the fall in food and vegetable prices in July was not enough to cut rates.

The central bank Governor said any adverse impact on economic growth due to not reducing the policy rate is “minimal and negligible”.

(Inputs from IANS)
 

New Delhi:

Prime Minister Narendra Modi on Wednesday congratulated RBI Governor Shaktikanta Das on receiving top rating in a global ranking of central bankers, lauding it as a recognition of his leadership.

He said on X, “Congratulations to RBI Governor Shri Shaktikanta Das for this feat, and that too for the second time. This is a recognition of his leadership at the RBI and his work towards ensuring economic growth and stability.” Mr Das has been ranked as the top central banker globally for the second consecutive year by the US-based Global Finance magazine.

Mr Das has been placed at the top of the list with two other central bank governors, who have been rated A . Grades are based on a scale from A to F for success in inflation control, economic growth goals, currency stability and interest rate management, according to a statement by Global Finance magazine. 

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

Reserve Bank of India Governor Shaktikanta Das. File
| Photo Credit: PTI

RBI Governor Shaktikanta Das on Friday emphasised on the need to eliminate biases in algorithms as the use of artificial intelligence (AI) and machine learning (ML) is on the rise.

Delivering the inaugural address at the 18th Statistics Day Conference organised by the RBI, he said the use of statistics had been ever growing as a preferred tool for drawing inferences in diverse fields and the discipline had moved beyond collection of facts to focusing more on interpretation and drawing inferences, taking into account the level of uncertainty.

The Reserve Bank of India (RBI) has ventured into AI/ML analytics in multiple areas. Under the RBI’s aspirational goals for RBI@100, Mr. Das said the central bank was aiming to develop cutting-edge systems for high frequency and real-time data monitoring and analysis.

Mumbai:

India is at the threshold of a major structural shift in its growth trajectory, highlighted Shaktikanta Das, Reserve Bank of India Governor, on Tuesday during his address at the 188th AGM (Annual General Meeting) of Bombay Chamber of Commerce & Industry.

The governor added that India is moving ahead towards 8 per cent GDP growth in a sustained manner, adding that the average growth India recorded in the last three years is 8.3 per cent.

“If you look at the average growth India recorded over the three years, the average comes to 8.3 per cent and the current year we have given a projection of 7.2 per cent growth,” said the Governor.

He also stated that during the last year, the Indian economy has contributed a major share to the global economy and called it an achievement for India.

“Indian economy in the last financial year 2023-24 contributed to 18.5 per cent of the global growth, i.e., 18.5 per cent of the global growth was driven by India. It is an achievement; it was much lower 7 or 8 years ago and I think the IMF projects this growth to go up,” he said.

He highlighted that the major drivers of this growth are the implementation of GST, the Insolvency and Bankruptcy Code, and Flexible Inflation Targeting.

“The main drivers of this growth, particularly in the last three years, are the various structural reforms which have been undertaken and several other policy initiatives that have been undertaken in the country, including GST,” he added.

Highlighting the importance and achievements of GST, the governor added, “It (GST) has the advantage of avoiding the multiplicity of taxes. GST is one of India’s biggest structural reforms since 1947.”

He added that GST has settled down in India well because there are instances where some countries have rolled back GST after implementation. But now GST collections have touched 1.7 lakh crore in a month and it is in a range of 1.5 to 1.7 lakh crore every month.

He also shared that India is poised to become the third-largest economy from the current fifth-largest

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

RBI Governor Shaktikanta Das on June 7, 2024, said the Monetary Policy Committee has decided to keep the repo rate unchanged at 6.5%. File
| Photo Credit: ANI

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5%. The decision, taken at the MPC’s meeting on Friday, marks the eighth time in a row that the policy rate has been put on hold to keep the focus on battling high inflation.

The MPC has revised its GDP growth forecast upwards from the earlier 7% estimate to 7.2% for the financial year 2024-2025. It has also decided to remain focused on withdrawal of accommodation to ensure that inflation does not accelerate, while supporting growth.

“These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2% while supporting growth,” Reserve Bank of India (RBI) governor Shaktikanta Das said after the meeting. 

Divided MPC

Mr. Das, along with MPC members Shashanka Bhide, Rajiv Ranjan, and Michael Debabrata Patra voted to keep the policy repo rate unchanged at 6.5% and to remain focused on the withdrawal of accommodation, while their colleagues Ashima Goyal and Jayanth R. Varma voted to reduce the policy repo rate by 25 basis points and for a change in stance to neutral. 

“There were signs of a more divided policy committee, with one additional member voting for a softening in stance as well as policy direction. The majority retained their cautious stance to guide inflation towards the 4% target on a durable basis, despite recent signs of disinflation,” said Radhika Rao, Executive Director and Senior Economist, DBS Bank, commenting on the decision.

Higher growth forecast

According to the MPC, high frequency indicators of domestic activity are showing resilience in 2024-25. The south-west monsoon is expected to be above normal, which augurs well for agriculture and rural demand, but headwinds from geopolitical tensions, volatility in international commodity prices, and geoeconomic fragmentation pose risks to the outlook. 

Taking various factors into consideration, real GDP growth for 2024-25 was projected at 7.2% as compared with the earlier projection of 7%, with the first quarter (Q1) growth estimate at 7.3%; Q2 at 7.2%; Q3 at 7.3%; and Q4 at 7.2%. The risks are evenly balanced.

Elevated food inflation

Emphasising that inflation has seen sequential moderation since February 2024, albeit in a narrow range from 5.1% in February to 4.8% in April 2024, the RBI Governor said that food inflation, however, remains elevated due to persistence of inflation pressures in vegetables, pulses, cereals, and spices. 

“Looking ahead, overlapping shocks engendered by rising incidence of adverse climate events impart considerable uncertainty to the food inflation trajectory,” he said, while announcing the MPC’s decisions. He added that volatility in crude oil prices and financial markets, along with the firming up of non-energy commodity prices, pose upside risks to inflation. 

Taking various factors into account, CPI inflation for 2024-25 is projected at 4.5%, with Q1 at 4.9%; Q2 at 3.8%; Q3 at 4.6%; and Q4 at 4.5%. The risks are evenly balanced.

Mr. Das emphasised that the path of disinflation has been interrupted by volatile and elevated food inflation due to adverse weather events. “Inflation is expected to temporarily fall below the target during Q2:2024-25 due to favourable base effect, before reversing subsequently. The MPC will remain resolute in its commitment to aligning inflation to the 4% target on a durable basis,” he said. 

The MPC reiterated the need to continue with the disinflationary stance, until a durable alignment of the headline CPI inflation with the target is achieved. 

RBI Governor Shaktikanta Das.
| Photo Credit: ANI

Reserve Bank Governor Shaktikanta Das on April 8 stressed the need for greater participation of Indian banks in rupee derivatives market, both domestically and offshore, while being prudent.

The Governor noted that participation of domestic banks in derivative markets remains limited with only a small set of active market-makers. Also, participation of Indian banks in global markets is growing but it is quite small.

“Domestic banks are dealing with market-makers in global markets rather than with end clients and are yet to emerge as market-makers of note globally,” Das said in his keynote address at the FIMMDA-PDAI Annual Conference in Barcelona.

Of course, he added banks need to do their own due diligence, assess their risk appetite, and then move forward carefully in this direction.

Also Read | RBI holds firm on rupee derivatives stance, defers norm implementation to May 3

“Going forward, our focus should be on enhancing and widening the participation of Indian players in markets for INRderivatives, both domestically and offshore, while being prudent,” the Governor said.

He noted that the recent financial market reforms undertaken by the Reserve Bank are aimed at providing a strong bedrock for markets to move to the next trajectory for meeting the growing funding requirements in the economy, providing cost-effective hedging options and competing effectively in global markets.

There are, however, some areas which call for attention, he said, while highlighting specific areas where more can be done.

Das said transparency in pricing remains work in progress and more can be done.

“The retail customer is yet to get a deal at par with large customers. There is a need for effective market-making and finer pricing for smaller deals on NDS-OM,” he said.

Divergence in pricing in FX markets for small and large customers is wider than what can be justified by operational considerations, Mr. Das said, and added that banks may need to do more to facilitate the use of the FX Retail platform..

“We continue to see banking channels being used by certain persons or entities to fund activities on unauthorised FX trading platforms. This warrants enhanced vigilance by the banks,” the Governor said.

He further said efforts are being made to leverage technology for achieving greater efficiency while also meeting the objectives of market reforms.

Also Read | RBI’s stance on underlying exposure for FX derivatives said to be unchanged

The Reserve Bank, he added remains engaged with stakeholders to assess the need for the introduction of new products and infrastructure based on evolving market developments.

“Innovation has been sought to be promoted through a move towards principle-based regulation, widening of the participant base, introduction of new products and platforms as well as enabling access to offshore markets,” Mr. Das said.

In his address, the governor also dwelt upon the journey of the Reserve Bank, especially in the context of its role in developing the financial markets in India in the recent period.

The RBI has entered its 90th year of its formation on April 1, 2024.

The spike in food prices has kept the Reserve Bank of India (RBI) worried even though overall inflation has moderated to a certain extent.

On April 5, the Central bank’s Monetary Policy Committee decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50%. This is the seventh time that the rates have been kept on hold.

“The Monetary Policy Committee (MPC) remains focused on aligning inflation to the target on a durable basis. We derive satisfaction from the progress made under disinflation. But the task is not yet finished,” RBI Governor Shaktikanta Das said at a press conference after the MPC meeting.

RBI Monetary Policy updates | Policy repo rate unchanged at 6.5%; real GDP growth for FY25 projected at 7%

The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.

Food price uncertainties

In his monetary policy statement, Mr. Das said, “Food price uncertainties continue to weigh on the inflation trajectory going forward. A record rabi wheat production would help temper price pressure and replenish the buffer stocks. Moreover, early indication of a normal monsoon augurs well for the kharif season.”

“International food prices also remain benign. The tight demand supply situation in certain categories of pulses and the production outcomes of key vegetables warrant close monitoring, given the forecast of above normal temperatures in the coming months,” he said.

“Frequent and overlapping adverse climate shocks pose key upside risks to the outlook on international and domestic food prices,” he said, adding that as per the Indian Mereological Department’s forecast, the months of April, May, and June will witness above normal maximum temperatures in most parts of the country. 

Volatile food inflation

Answering a question on what is fuelling food inflation, RBI Deputy Governor Michael D. Patra told The Hindu, “Food inflation has been highly volatile. In February 2024 it was 7.8% and the indications are that in view of adverse climate events recurring, it will remain high.”

“The actors keep shifting. Sometime it is cereals, then vegetables and currently it is protein which is eggs, meat and fish. There is some firmness in rice prices,” he said. “These are short duration spikes but since they occur on multiple occasions, they give a persistent character. So what we are worried about is that there should not be any spillover to the rest of the CPI. So we remain watchful, very closely.” Mr. Patra added.

Growth-inflation dynamics

Overall inflation has been controlled to a certain extent; since the last policy, the growth-inflation dynamics have played out favourably.

While growth has continued to sustain its momentum, surpassing all projections. headline inflation has eased to 5.1% during January and February 2024 from 5.7% in December 2023, with core inflation declining steadily over the past nine months to its lowest level in the series, Mr. Das said in his monetary policy statement.

He added that the fuel component of the CPI remained in deflation for six consecutive months; food inflation pressures, however, accentuated in February.

“Looking ahead, robust growth prospects provide the policy space to remain focused on inflation and ensure its descent to the target of 4%. As the uncertainties in food prices continue to pose challenges, the MPC remains vigilant to the upside risks to inflation that might derail the path of disinflation,” he said.

“Under these circumstances, monetary policy must continue to be actively disinflationary to ensure anchoring of inflation expectations and fuller transmission of the past actions. The MPC, therefore, decided to keep the policy rate unchanged at 6.50% in this meeting and remain focused on withdrawal of accommodation. The MPC will remain resolute in its commitment to aligning inflation to the target,” he added.

Fuel price deflation

Mr. Das said that cost push pressures faced by firms were seeing an upward bias after a period of sustained moderation.

“Deflation in fuel is likely to deepen in the near term, following the cut in LPG prices in March. Notwithstanding the cut in petrol and diesel prices in mid-March, the recent uptick in crude oil prices needs to be closely monitored. Continuing geo-political tensions also pose upside risk to commodity prices and supply chains,” he said.

Assuming a normal monsoon, CPI inflation for 2024-25 is projected at 4.5% with Q1 at 4.9%; Q2 at 3.8%; Q3 at 4.6%; and Q4 at 4.5% . The risks are evenly balanced.

Growth prospects

Around this time two years ago, when CPI inflation had peaked at 7.8% in April 2022, the elephant in the room was inflation, Mr. Das said. “The elephant has now gone out for a walk and appears to be returning to the forest. We would like the elephant to return to the forest and remain there on a durable basis. In other words, it is essential, in the best interest of the economy, that CPI inflation continues to moderate and aligns to the target on a durable basis. Till this is achieved, our task remains unfinished,” he said.

On growth prospects, the Governor said that headwinds from geopolitical tensions, volatility in international financial markets, geoeconomic fragmentation, rising Red Sea disruptions, and extreme weather events pose risks to the outlook.

Taking all these factors into consideration, real GDP growth for 2024-25 is projected at 7%, with Q1 at 7.1%; Q2 at 6.9%; Q3 at 7%; and Q4 at 7%. The risks are evenly balanced.