The Reserve Bank of India (RBI) has injected over 17 lakh crore over the last two years and would provide enough finances for the economy, according to governor Shaktikanta Das.
Despite the challenges posed by the Russia-Ukraine conflict, he believes the economy is well-positioned due to its substantial forex reserves and modest current account imbalance. “We are comfortably placed to deal with any challenges with regard to financing the CAD, and the RBI stands committed to deal with many challenges on this front,” he said.
The RBI governor stated at the CII National Council meeting that banks are properly capitalized, having a system-level capital adequacy ratio of 16. Gross non-performing assets (NPAs) dropped to a historic low of 6.5 percent, he added.
In response to the recent spike in prices, Das stated that a similar scenario existed in 2020 and that he expects inflation to moderate in the future. Das, on the other hand, stated that he would prefer not to speculate on future monetary policy stances and interest rates and would instead leave that decision to the MPC.
In response to a question, the governor stated that there are no concerns about stagflation in India and that inflation would not exceed 6% in the fiscal year 2022-23.
Retail inflation in India, as measured by the consumer price index (CPI), has been over the Reserve Bank of India’s comfort zone for the previous two months, prompting demands for the central bank to tighten monetary policy.
Meanwhile, Wholesale Price Index (WPI)-based inflation increased to 13.11 percent in February, up from 12.96 percent the previous month. Economists warned that, given the rising global geopolitical concerns, inflation would most likely remain high.
In its forthcoming policy meeting in April, the RBI is projected to lift its inflation prediction for 2022-23 from 4.5 percent to 5.5 percent. Shaktikanta Das went on to say that banks’ financial health has significantly strengthened, with the provision coverage ratio at 6.9 percent.