RBI Gov Das stresses on price stability as key to economic planning and growth
RBI Governor Shaktikanta Das Highlights Importance of Price Stability for Economic Growth
In a recent address at the "High-Level Policy Conference of Central Banks from the Global South," Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the critical role of price stability in fostering sustained economic growth. He explained that maintaining stable prices is as crucial as growth itself, as it helps reduce uncertainty, encourages savings and investment, and boosts the economy's potential growth rate.
Governor Das pointed out that stable inflation benefits both individuals and the economy by enhancing purchasing power and creating a stable environment for investment. He acknowledged the challenges of balancing inflation and growth, especially in light of recent global crises such as the COVID-19 pandemic, geopolitical tensions, supply chain disruptions, and climate change.
Reflecting on India's economic journey, Das credited the Flexible Inflation Targeting (FIT) framework for its role in managing challenges during the pandemic and the Russia-Ukraine war. This framework allows for inflation targeting while accommodating growth objectives, ensuring that monetary policy remains adaptive.
Das noted that during the pandemic, the RBI prioritized growth by tolerating temporary inflation spikes due to supply chain issues, which eventually normalized. He also highlighted the importance of price stability for central banks in the Global South, where economic development and poverty alleviation are key priorities.
In conclusion, Das stated that price stability is essential for achieving sustained high growth, as it reduces uncertainty, encourages investment, and protects the purchasing power of vulnerable populations.
Doubts Revealed
RBI
RBI stands for the Reserve Bank of India, which is the central bank of India. It manages the country's money supply and interest rates.
Governor
The Governor of the RBI is the person in charge of the Reserve Bank of India. They make important decisions about India's money and economy.
Shaktikanta Das
Shaktikanta Das is the current Governor of the Reserve Bank of India. He is responsible for overseeing the country's monetary policy.
Price Stability
Price stability means keeping the prices of goods and services steady without too much increase or decrease. It helps people plan their spending and savings better.
Economic Growth
Economic growth is when a country's economy gets bigger and produces more goods and services. It usually means more jobs and better living standards for people.
Global South
The Global South refers to countries that are generally less economically developed, mostly located in Africa, Latin America, and parts of Asia, including India.
Flexible Inflation Targeting
Flexible Inflation Targeting is a way of managing the economy by keeping inflation, or the rate at which prices rise, within a certain range. It helps ensure that prices don't go up too fast or too slow.
Geopolitical Tensions
Geopolitical tensions are conflicts or disagreements between countries that can affect global peace and trade. They can impact economies by causing uncertainty and affecting prices.
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