Mummbai, March 21 : Amid rising concerns of rupee depreciation, in the backdrop of the US announcing rate hike, the Reserve Bank of India Governor Shaktikanta Das on Monday said that India will be able to maintain the stability of the Indian rupee. The remarks come at a time when there are speculations of Indian rupee depreciating following the US Federal Reserve Bank increasing the interest rates by 25 basis points, after more than three years. “…I can say with reasonable amount of confidence that we will be able to maintain the stability of the Indian rupee. In fact, our interventions in the foreign exchange market, if you see, it is the standard policy, that we intervene to prevent excessive volatility,” Das said while addressing CII National Council Meeting here.
He noted that the India has been able to maintain the stability of the Indian rupee and will continue to maintain even going forward. Speaking about inflation, Das noted that it is expected to moderate. “I don’t see the inflation going beyond 6 per cent and infact our expectation is it will moderate at 4.5 per cent,” he said. Stating that the current situation is unimaginably uncertain, Das said it is difficult to make assumptions on the movement of price of crude. On the impact of the ongoing Russia-Ukraine crisis on India’s growth, Das said, “this year’s projection is 8.9 percent.
And even if you factor in the impact of impact of the Ukraine crisis, it will be very marginal on that.” While the Governor did not give any growth projections, he said, “I don’t see the inflation going up beyond 6 per cent.” He noted that the Indian economy is better placed today and there is no reason for complacency. “We have to be watchful and we are. We are also monitoring the crude and commodity prices and the volatility very closely. And while we are watchful about the inflation, but at the same time, we remain committed with dealing with any kind of challenge,” Das added. He also noted that with all the volatility and uncertainties, the possibility if stagflation for India doesn’t arise. Speaking about the stance of RBI, he said that while focusing on growth and development we have to also look at stability and long-term sustainability of all investments. “We have to factor in stability issues and also look at sustainability of every investment.
Sometimes, in rush for investments, throwing the sustainability aspects, will be counterproductive,” he added. Das said since, during the pandemic period, there was no activity happening in the financial markets and it appeared to be freezing up, the RBI announced liquidity infusion measures to ensure that liquidity is not scare and there is abundant liquidity in the market. The Governor emphasized that even going forward, the RBI will ensure that there is enough liquidity in the market. “We will ensure that there is abundant liquidity in the market for the credit system to be active for the credit system to function normally. And we will ensure that there is no scarcity of liquidity. There will be abundant liquidity to meet the productive requirements of the economy,” he said. Das said the approach of the RBI has been going beyond and looking beyond the rule book. The Governor further said that the RBI’s stance has been supportive of the growth and that the apex bank has resisted all the temptations of reversing its monetary policy and moving away from accommodative stance, because we could clearly foresee that the inflation will moderate and it will be moderated. He noted that initiating a premature demand compression through monetary policy action would be counterproductive monetary policy. “…premature monetary policy intervention would have resulted in demand compression, and that would have been counterproductive for growth and revival. And when the economy was facing grim prospect of a negative growth, that was not the time to think of changing your stance, the idea continues to remain supportive of growth,” he added.
