RBI Governor Shaktikanta Das Unveils Monetary Policy Committee's Decisions, Highlights Economic Strength
Reserve Bank of India (RBI) Governor Shaktikanta Das shared the outcomes of the Monetary Policy Committee's three-day discussions, emphasizing the resilience of India's economy and unveiling key decisions, including maintaining the benchmark interest rate at 6.5%. Das highlighted fiscal progress, manageable external balances, and the role of forex reserves as a buffer against external disruptions. The central bank aims to balance economic growth and inflation, focusing on "withdrawal of accommodation.
Reserve Bank of India (RBI) Governor Shaktikanta Das revealed the outcomes of the three-day deliberations by the central bank's six-member Monetary Policy Committee (MPC) on Friday. The MPC, a high-powered panel responsible for determining interest rates, commenced its discussions on Wednesday.
Das emphasized the robustness of the Indian economy, highlighting the healthy financial positions of banks and corporates, the steadfast progress in fiscal consolidation, manageable external balances, and the forex reserves acting as a safeguard against external disruptions. He underscored the favorable conditions for sustained economic growth, fueled by consumer and business optimism. Looking ahead, the RBI governor expressed the commitment to further strengthen these fundamentals as a defense against global uncertainties.
In alignment with its policy stance of "withdrawal of accommodation," the RBI aims to align inflation with its target of 6% (+/-2) while supporting economic expansion. Essentially, the central bank will focus on restraining the money supply to manage inflationary pressures.
The MPC made several notable decisions:
- The RBI maintained the benchmark interest rate at 6.5%, signaling continuity in its approach.
- A proposal was made to increase the UPI transaction limit for payments to hospitals and educational institutions from ₹1 lakh to ₹5 lakh.
- The GDP growth projection for the current fiscal year was revised upward to 7% from the earlier estimate of 6.5%.
- GDP growth for the December and March quarters was pegged at 6.5% and 6%, respectively.
- The average retail inflation projection for 2023-24 was retained at 5.4%, with uncertainty arising from fluctuating food prices.
- There is a cautionary note about potential intermittent spikes in headline inflation in November and December due to volatile vegetable prices.
- As of December 1, forex reserves stood at $604 billion, instilling confidence in meeting external financing requirements comfortably.
The decisions collectively reflect the RBI's commitment to balance economic growth with inflation control, leveraging the country's strong economic fundamentals in the face of global uncertainties.
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