Shaktikanta Das seeks to shield growth as RBI prioritises inflation fight

India’s central bank will seek to shield the economy in the face of a global slowdown even as the monetary authority prioritizes taming inflation, according to Governor Shaktikanta Das .

“We are seeing signs of slowdown globally and it will have an impact on India,” Das said in an interview with television channel Zee Business on Friday. “But we will ensure the growth sacrifice is minimal.”

His remarks came after data on Wednesday showed India’s gross domestic product grew less than RBI’s estimate of a 16.2% expansion, and signs that domestic demand will further moderate as borrowing costs rise are emerging.

“We will analyze the GDP numbers and address the reasons behind it in our next policy announcement,” Das said, adding that high frequency indicators, and parts of rural and urban demand continue to be resilient. 

Inflation has peaked and will ease to 5% by April-June next year, Das said, reaffirming his outlook that price pressures are easing. The governor assured that RBI isn’t behind the curve and is in “sync with the times” although he declined to provide guidance on the path and pace of monetary tightening.

RBI has raised the benchmark policy rate by 140 basis points in three adjustments since May to tame prices and is scheduled to hold its next rate review on Sept. 30.  

Other Highlights From Das:
 

Policy transmission rate between lending and deposit rate is narrowing

India has strong FX reserves, Das said, adding that foreign currency buffer is helping keep rupee stable

Banks need more capital to maintain lending rate

“Will consider new bank license application on merit,” Das said, adding that “fit and proper’ applicants will get the license

--With assistance from Devidutta Tripathy.