Shaktikanta Das, the governor of Reserve Bank of India, has suggested introducing structural reforms and fiscal measures to trigger growth. The governor stated that the current monetary policy has certain loopholes or limitations that might hinder development.
He mainly focused on five key drivers to push growth, which circled the food processing industry, tourism-e-commerce, start-ups and efforts to become a global value chain.
An alumnus of St. Stephen, Delhi University, Das said that estimating a country’s growth potential posed a significant challenge for central banks. “Nonetheless, a view has to be taken on the true nature of the slack in demand and supply-side shocks to inflation for timely use of countercyclical policies,” he said. The country’s growth potential is a catalyst to central banks as easing credit beyond a point will be similar to pushing a string.
Days ahead of the Union Budget unravelling, Das also made a statement regarding infrastructure investment that is going to boost the growth potential of the economy, and also the role of states in enhancing capital expenditure which as a high multiplier effect.
The monetary policy is in a state of flux, and RBI somehow manages to deal with the uncertainty through constantly updating assessment of the economy based on current data and survey-based consensus and information placed alongside with model-based estimates for policy formulation. This helped RBI slack rates last year in anticipation of a slumping period.
Das further said that although the global experience with financial stability is still amidst turbulence and very unsettled, the RBI is laying much emphasis on it. Also, there was a focus on financial inclusion and supporting secured, seamless and real-time payments and settlements.
“This renewed focus on financial inclusion and secured payment are not only aimed at promoting the confidence amongst the citizens in India’s financial system but also improving the credibility of monetary policy for price stability, inclusive growth and financial stability,” said Das.