RBI Governor Shaktikanta Das Discusses Inflation Risks and Economic Stability
In a recent address at the CNBCTV18 Global Leadership Summit, Reserve Bank of India (RBI) Governor Shaktikanta Das highlighted the challenges and achievements of the central bank. He emphasized that while a “soft landing” has been achieved amidst various global challenges, risks of inflation resurgence and economic slowdown persist.
Global Economic Challenges
Governor Das pointed out that central banks worldwide have tightened monetary policies due to high inflation caused by supply chain disruptions and geopolitical tensions, such as the war in Ukraine. He noted that geopolitical conflicts, economic fragmentation, commodity price volatility, and climate change continue to pose significant challenges.
Inflation and Monetary Policy
Das mentioned that the RBI has kept the policy repo rate steady at 6.5% for the tenth time, aiming to bring inflation down to a 4% target. However, ongoing food inflation presents a challenge. The next monetary policy meeting is scheduled for early December.
India’s External Sector Stability
Discussing India’s external sector, Das stated that it has shown strength and stability. The current account deficit is manageable at 1.1% of GDP for Q1 2024-25. Merchandise exports have rebounded, and services exports have grown by 11% in the first half of the financial year. Robust services exports and private remittances are helping manage the current account deficit.
Foreign Exchange Reserves
India’s foreign exchange reserves are the fourth largest globally, standing at USD 682 billion as of October 31. These reserves are sufficient to cover the entire external debt and about 12 months of merchandise imports.
Climate Risks
Governor Das also mentioned that the RBI is working on guidelines for disclosing climate-related financial risks, which will be released soon.
Doubts Revealed
RBI -: RBI stands for Reserve Bank of India. It is the central bank of India, which means it helps manage the country’s money and financial system.
Governor -: The Governor of the RBI is like the head or leader of the Reserve Bank of India. Shaktikanta Das is the current Governor, and he makes important decisions about India’s money matters.
Inflation -: Inflation is when the prices of things we buy, like food and clothes, go up over time. It means you need more money to buy the same things.
Economic Stability -: Economic stability means keeping the economy steady and strong, so people have jobs, and prices don’t change too much.
CNBCTV18 Global Leadership Summit -: This is a big meeting where important leaders talk about global issues. CNBCTV18 is a news channel in India that covers business and financial news.
Soft Landing -: A soft landing is when the economy slows down gently without causing too many problems, like job losses or big price changes.
Geopolitical Conflicts -: Geopolitical conflicts are disagreements or fights between countries that can affect the whole world, like wars or trade disputes.
Climate Change -: Climate change is when the Earth’s weather patterns change, causing problems like more storms or hotter temperatures.
Policy Repo Rate -: The policy repo rate is the interest rate at which the RBI lends money to banks. It helps control inflation and the economy.
Current Account Deficit -: A current account deficit happens when a country spends more money on buying things from other countries than it earns from selling things to them.
Foreign Exchange Reserves -: Foreign exchange reserves are like a country’s savings in foreign money, which help it buy things from other countries and keep its own money stable.
Climate-related Financial Risks -: These are risks to the economy and money system caused by climate change, like damage from storms or changes in energy use.
