Restoring inflation-growth balance key task for new Governor: Das
New RBI governor Sanjay Malhotra's key task will be to restore the inflation-growth balance, the outgoing governor Shaktikanta Das said. Das acknowledged challenges like global shifts and cybersecurity, and praised the improved government-RBI coordination in his six years in office.
Mumbai: Restoring the growth-inflation balance will be the most important task ahead for the new Reserve Bank of India Governor Sanjay Malhotra as he takes charge on Wednesday, said the outgoing Governor Shaktikanta Das.
“I think restoring the inflation-growth balance is the most important task ahead of the Reserve Bank, and I am sure the Team RBI, under the leadership of the new Governor, will take it forward,” said Das in his final media address.
Also read | What does Shaktikanta Das think about new RBI Governor Sanjay Malhotra?
Das also listed other challenges awaiting the central bank, including a changing global order and cyber security concerns, even as he expressed optimism about his successor's capabilities.
The government on Monday appointed Malhotra, the current revenue secretary, as the new RBI Governor.
Amid war on inflation
The appointment comes amid an ongoing war on inflation, a sudden slow turn in economic growth and pressures on exchange rate stability following the election of Donald Trump as US president.
Das also emphasised improved coordination between the government and RBI during his six-year term. He acknowledged this on social media platform X, while thanking finance minister Nirmal Sitharaman: "The fiscal-monetary coordination was at its best and helped us to deal with the multiple challenges during the last six years."
Also read | RBI Guv Shaktikanta Das bids adieu on X, talks of ‘unprecedented global shocks’
Das also noted that while differences in viewpoints were inevitable, most were resolved through internal dialogue.
"Perspective of finance ministry or central bank can differ at times. It happens world over. In my tenure we have been able to resolve all issues through internal discussions," said Das, adding that the Governor takes a call keeping in mind the needs of the wider economy and the mandate given to him.
Das had taken charge from his predecessor Urjit Patel when the relationship between the RBI and government had hit a low over growing differences around the use of RBI's capital reserves.
Rebuilt bridges
Das managed to rebuild bridges both within and outside RBI using a consultative approach. But disagreements with the government emerged during the fag end of his term, when he refused to cut interest rates, despite calls from senior ministers.
The Monetary Policy Committee under the chairmanship of Das kept rates unchanged in its meeting last week, as growth slipped to a seven quarter low of 6.5% in October as against RBI's projection of 7% and inflation spiked to 5.49% in September compared to RBI's estimate of 4.8%.
Also read | Shaktikanta Das's term ends amid rising inflation, GDP slowdown
In fact, Das admitted on 6 December that India’s near-term inflation and growth outcomes have turned somewhat adverse since the October policy meeting.
However, he sounded more optimistic about the future trajectory of inflation and India’s growth prospects. “The medium-term prognosis on inflation suggests further alignment with the target, while growth is expected to pick up its momentum,” Das said, pointing out that persistent high inflation reduces the purchasing power of consumers and adversely affects both consumption and investment demand.
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First Published:10 Dec 2024, 09:53 PM IST
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