Reserve Bank of India: Reserve Bank of India (RBI) Governor Shaktikanta Das said that it is a priority for South Asian countries like India to curb inflation. Uncontrolled prices can pose a risk to the growth and investment outlook.
Addressing the program organized by the International Monetary Fund (IMF), Das said that the increasing level of debts and the constant pressure of increasing prices are a risk to economic growth.
In such a situation, both of them have to be controlled. He said that South Asian countries have faced many external shocks in the last few years. Volatility in financial markets, disruption of global supply chains by the COVID-19 pandemic, and food and energy crises triggered by the Russia-Ukraine war. Aggressively tightening monetary policies led to volatility in the financial market. He said that these external shocks have put constant pressure on prices in South Asian economies.
The RBI governor said, “However, inflation should ease further as commodity prices ease in the last few months and supply chain bottlenecks ease.” If inflation persists at elevated levels, then risks to the growth and investment outlook may increase.
Repo rate increased to control inflation
He said that the countries of this region are highly dependent on imported fossil fuels, so imported fuels become vulnerable to inflation. Das said, “Targeted supply-side interventions, fiscal, trade policy and administrative reforms have also become important tools along with credible monetary policy measures to bring down inflation.
” RBI itself took the step of increasing the repo rate five times in seven months to control inflation last year. During this, there was a total increase of 2.25 percent in the repo rate and it has now reached 6.25 percent. The RBI has got relief from the retail inflation rate coming down to 5.88 percent in November. “However, our view on deflation should be made keeping in mind the rising risks to the growth outlook amid concerns over a slowdown in global growth and trade,” he said.
He said that apart from inflation, the South Asian region should focus on reducing external debt vulnerabilities, focusing on more productive sectors, emphasizing energy security and increasing cooperation for a green economy. (Input: PTI)
