RBI governor hails Indian economy for resilience against global turmoil

He said financial conditions had tightened significantly across the world, leading the global economy into a period of churning.

PTIUpdated: Wednesday, November 02, 2022, 05:29 PM IST
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RBI governor Shaktikanta Das. |

The Indian economy is growing steadily, resilient in the face of global economic turmoil, Reserve Bank of India Governor Shaktikanta Das said today.

The RBI governor was speaking at the annual banking conference organised by the Federation of Indian Chambers of Commerce and Industry and the Indian Banks' Association.

He said financial conditions had tightened significantly across the world, leading the global economy into a period of churning.

"Yet the strength of our macro-fundamentals has stood out in comparison with peers, bearing testimony to prudent macroeconomic policies and the resilience of the buffers we have built up," Das said.

In the face of these headwinds, the domestic economic recovery has been more broad-based. Private sector consumption was healthy and consumer goods sales have risen significantly, he said.

However, external demand remains slow as global economic growth weakens, Das said.

The RBI used the flexibility of the inflation targetting framework to ensure economic resilience for the country during the COVID-19 pandemic, Das said. This prevented a complete downturn of the economy after the initial negative GDP figure.

Das said tight banking system liquidity in October was a transitory phenomenon. The factors that squeezed cash balances, including currency leakages, the RBI's forex operations and the tax outflows, were likely to ease.

Banks also had the option to liquidate their excess holding of dated securities to manage pressures on their cash positions. Moreover, the government was likely to ramp up its spending in Oct-Mar, adding to the banking system liquidity, Das said.

The RBI will keep liquidity adequate to meet the requirements of the productive sectors of the economy through its market operations, Das said.

"So far as the RBI is concerned, we remain committed to support and preserve macroeconomic and financial stability," Das said. "Once again, it is a moment of 'whatever it takes'."

On the domestic currency, the RBI governor said the rupee's movement had been orderly in the face of geopolitical tensions that have led to the US dollar firming up sharply.

The Indian unit had outperformed a majority of its peers in terms of cross-currency valuations, Das said. Trade settlement in the rupee had also gained momentum since it had been introduced on a bilateral basis.

"Thus, even in real terms, the Indian rupee is the least misaligned in the face of tsunamis of global spillovers," Das said.

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