On Wednesday, the Governor of the Reserve Bank of India, Shaktikanta Das, said that the Indian financial system is secure.
Das was giving a presentation at the CII Annual Session 2023 when he made the observation that the international economy is facing problems as a result of continuous geopolitical conflicts, increasing inflationary pressures, and the tightening of financial conditions as a result of major central banks implementing monetary policy changes.
Amidst global uncertainties, the Indian banking system remains stable and resilient with strong capital and liquidity positions, improving asset quality, better provisioning coverage and improved profitability: RBI Governor Shaktikanta Das pic.twitter.com/UsHLAyA6X2
— ANI (@ANI) May 24, 2023
Governor of the Reserve Bank of India Shaktikanta Das has remarked that the choice to suspend interest rate rises is not exclusively under his power but rather relies on the scenario that is currently taking place on the ground. He made a point to emphasise that he bases his decisions on the conditions and variables that are driving the actual economy.
This follows the recent decision by the RBI to keep the repo rate at its current level of 6.5 percent for the month of April.
Das stressed, “According to the IMF’s World Economic Outlook in April 2023, global growth is projected to slow down from 3.4% in 2022 to 2.8% in 2023, with a subsequent increase to 3% in 2024.”
The Governor of the RBI, Shaktikanta Das, went on to stress the fact that although the economic downturn is predominantly affecting developed nations, it is expected that the Asia-Pacific area will account for nearly 70% of global growth in 2023. According to these forecasts, “In line with these projections, India is expected to contribute around 15% to global growth in the current year.”
Das pointed out that the uncertainty over the future direction of monetary policy is contributing to the volatility that is now present in the financial markets. The continued existence of this uncertainty is keeping market attitudes on edge. “On the upside, global growth is being supported by the easing of supply chain disruptions, gradual normalisation of energy and food markets, easing commodity prices and reopening of the Chinese economy. Global inflationary pressures are also showing signs of abetment, though they remain well above the target in most of the countries.”
The Governor of the RBI has indicated that the 6.5% economic growth prediction for the fiscal year 2023–24 has been made public. “For the fiscal year 2023-2024, we have provided a number of 6.5%, and we have said that we have completed our in-house investigation… The fact that agriculture has done well and that we are anticipating a normal monsoon, as well as the fact that the service sector continues to function extremely well, gives us reason to be confident at this point in time.
