RBI Governor Shaktikanta Das (file photo)
Food inflation has also fallen, Das said, adding that measures such as the Food Corporation of India releasing wheat and rice stocks have also helped.
Governor Shaktikanta Das has said the Reserve Bank will aim to push headline inflation to its target of 4 percent, but marked El Nino as a challenge to its efforts.
In an exclusive interview with PTI Bhasha at his office, Das exuded confidence that the economy will grow at 6.5 percent in FY24, as previously estimated by the RBI. The central bank’s interest rate hikes totaling 2.50 percent since May last year, combined with government supply-side measures, helped push inflation to 4.25 percent in May from a peak of 7 percent. .8 percent in April last year. said Das.
“We remain vigilant on inflation. We expect inflation to reach 5.1 percent in FY24, and we will continue to aim to bring it down to 4 percent,” he added.
As for high borrowing costs, Das said interest rates are directly related to inflation, and the RBI could cut interest rates if consumer price inflation cools sustainably to 4 percent or thereabouts. The governor explained that the war between Russia and Ukraine, which led to an explosion in commodity prices, led to a sharp increase in inflation, but added that crude oil prices are no longer a problem from an inflation point of view now they are on the back burner. USD 76-76 per barrel.
Food inflation has also fallen, Das said, adding that measures such as the Food Corporation of India releasing wheat and rice stocks have also helped.
Targeted reductions in duties on certain products have also helped, he added. When asked about inflation challenges, Das pointed to 2-3 factors, such as the volatile international situation due to geopolitics and the monsoon situation at home.
“Although a normal monsoon is expected, there are concerns about El Nino. We’ll have to see how serious it is. Other challenges are mainly weather-related events, which could have an impact on food inflation,” Das said, adding that we will have to grapple with these uncertainties.
On the growth front, Das said the RBI has considered all factors to arrive at its estimate of 6.5 percent growth in real GDP and is confident the economy will achieve the same, even as other estimates observers, such as the IMF, that this will happen. be much lower.
He said bank lending growth of about 16 percent is sustainable and the RBI is closely monitoring developments on this front. Corporate credit is also in high demand, including project loans, he said, underlining that overall credit growth is broad-based.
The rupee was less volatile in calendar year 2023 and the domestic currency has strengthened against the dollar, Das said, reiterating that the RBI will continue its efforts to reduce volatility.
Das said he is confident the rupee will not be affected even if the US Fed raises rates, noting that the domestic currency has remained stable even despite a 5 percentage point hike in US interest rates.
The governor said the current account deficit (CAD) will be “eminently manageable” in FY24 as there are positive factors such as higher service exports and lower crude oil prices working in our favor.
(This story has not been edited by News18 staff and was published from a syndicated news agency feed – PTI)
