Indian Economy Well-Equipped to Tackle Global Spillovers: RBI Governor

Reserve Bank of India (RBI) Governor Shaktikanta Das expressed confidence in the country’s economic and financial stability, emphasizing that India is well-positioned to weather any global challenges. Speaking at the launch of the Kochi International Foundation, Das highlighted the strength of India's external sector, noting that the current account deficit has remained within manageable limits, standing at 1.1%.

“The growth of the Indian economy today presents a picture of stability and strength,” Das remarked, referencing the progress India has made in recent years. He pointed out that in 2010-2011, India's growth rate was around six to seven percent, a benchmark that underscores the country's solid growth trajectory.

Das also lauded India’s robust foreign exchange reserves, which now stand at approximately USD 675 billion, positioning the country among the largest reserves globally. On inflation, he acknowledged recent fluctuations but expressed optimism, stating, “Inflation is expected to remain moderate despite occasional spikes.” India's inflation increased to 6.2% in October, up from 5.5% in September, primarily due to food price pressures. Das likened the inflationary trend to “an elephant in the room” but reassured that it would eventually subside, adding, "Now the elephant has gone out of the room for a walk, but it will go back to the forest."

Das also provided insight into the RBI’s response to inflation during the Ukraine war, highlighting the importance of not resorting to negative interest rates or excessive money printing, strategies employed in other nations. “What we did not do in India is equally important. We, at the RBI, did not print notes because printing notes would have exacerbated the very problems we were trying to resolve. In many countries, inflation became deeply entrenched, but ours is moderating,” he explained.

On the subject of interest rates, Das noted that the RBI’s decision to keep rates at 4% has contributed to a smoother recovery, making India’s economic rebound more resilient.

Looking ahead, Das called for continued structural reforms, particularly in the service sector. He drew attention to India’s innovative digital initiatives, such as the Unified Payments Interface (UPI) and Unified Lending Interface (ULI), and revealed plans by the RBI to bring transformational changes in credit delivery to small entrepreneurs and farmers. These reforms, he said, will play a crucial role in strengthening India's economic foundations and fostering inclusive growth.