Reserve Bank Governor Shaktikanta Das on Wednesday said inflation has eased, and the next print is expected to be below 4.7 per cent, though there is no room for complacency and the war on inflation will continue.
Retail inflation fell to an 18-month low of 4.7 per cent in April, mainly due to a decline in food prices.
“Inflation has come down (and) the final print is 4.7 per cent. Maybe the next print could be smaller.
However, the governor emphasized that though inflation has come down, there is no room for complacency.
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He said inflation was looking benign, but the sudden outbreak of the Russia-Ukraine war changed the situation, resulting in disruption of global supply chains and firming up of global commodity prices.
He assured that the war against inflation is not over and RBI will remain alert to the emerging situation.
Expressing confidence in the macroeconomic stability, Das said that there is a platform to support domestic growth.
Talking about the macroeconomic stability, he said that inflation has come down, GDP has grown steadily, and the current account deficit is manageable.
He also said that the fiscal deficit is on the path of consolidation.
“So, on the back of macroeconomic stability and a strong financial sector… the percentage of gross non-performing assets of the banking sector at the system level stood at 4.4 per cent at end-December 2022,” he said.
Therefore, he said, non-performing assets, which were a major challenge for the Indian banking sector, have come down, and are showing very good signs of resilience.
Besides, he said, credit offtake in banks also remains quite resilient, and stands at 15.5 per cent as per the latest data.
“And on top of that, we have the advantage of demographics, which is again a huge opportunity for India. And this is something that will ultimately increase our potential production or what some like to call India’s growth potential. This is a theme that will play out in the medium to long term,” he said.
He expressed confidence that India can register a growth of 6.5 per cent during the current financial year due to these headwinds.
Regarding downside risks to the Indian economy, Das said any surprises on the geopolitical front could be a stretch, and a slowdown in exports is another hindrance.
He quoted the India Meteorological Department (IMD) as saying that El Nino could be another risk.
“There is evidence of a positive Indian Ocean Dipole, which should be able to neutralize the effect of El Niño to some extent. But leave it to the weather experts. But, this is an uncertainty and only time will tell to what extent it affects our economy.
Stating that there is a confluence of factors, which are feeding into the Indian growth story, he said that the RBI will remain proactive, vigilant and prudent and will do its best to support the economy to maintain India’s financial stability.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI,