MUMBAI: RBI governor Shaktikanta Das said that the ‘last mile in disinflation’ – bringing down inflation – is yet to be covered and the central bank should successfully navigate this journey to preserve the credibility of the monetary policy framework.
Das’s statement is seen as an indication that he is willing to keep rates on hold for longer before shifting the monetary policy’s stance and reducing interest rates. Previously, too, Das had noted the challenge of the ‘last mile’ in bringing down inflation due to food price hikes which passed from one commodity to another. He had also drawn an analogy between inflation and an elephant in the room, saying that while the elephant had left the room for a walk, RBI wanted it to return to the forest for good.
Speaking at a conference organised by FICCI and IBA, Das noted the strength of the economy. “The Indian economy is forging ahead with macroeconomic and financial stability, and a favourable growth-inflation balance,” he said, adding, “Consumption, which had been our main driver of growth, has picked up pace, with recovery in rural demand. Investors’ confidence is at an all-time high, banks and corporates demonstrate robust balance sheets, and structural reforms are playing a big role in pushing forward our growth frontier.”
Das also urged the private sector to capitalise on favourable conditions and increase investment, especially in areas like manufacturing and infrastructure which are critical for sustained growth. According to Das, banks and financial institutions could develop tailored financial products and services for MSMEs, such as flexible credit options and improved access to working capital to support their growth and job-creation.
Das said that India’s economy is on a “rising trend,” with structural drivers like infrastructure, digital public infrastructure, and innovation playing a bigger role in the country’s long-term growth.
