India's economic growth will be close to 6.5% in FY23-24: RBI Governor Shaktikanta Das

RBI Governor speaks at CII annual session:  India's economic growth in the current fiscal (FY23-24) will be close to 6.5 per cent, the Reserve Bank of India (RBI) Governor Shaktikanta Das said at the annual session of Confederation of Indian Industry (CII) on May 24, 2023. The governor further said that inflation has moderated but there is no room for complacency. 

Das said there is a suggestion that RBI should take a pause in the upcoming monetary policy meetings. To this, he replied, "It's not in my hands. It all depends on the situation on the ground. I am driven by what's happening on the ground, what is the outlook, and how is the inflation buildup, et al.

The governor further said that the next inflation print is expected to be lower than 4.7 per cent. The inflation based on the consumer price index was 4.7 per cent in April 2023.

The RBI governor said that corporates have deleveraged themselves in comparison to pre-COVID and RBI's endeavour is to ensure the stability of the exchange rate. According to him, there is geopolitical pressure on the global economy, "Central Banks across the world have continued to tighten the monetary policy at a much slower pace relative to the aggressive 75 basis points (bps) which were witnessed in 2022, while some central banks have taken a pause, global monetary policy is still settling down as the inflation conditions are fast evolving," said Das.

He added, due to the US banking crisis, the global financial system has been severely tested and the outlook has been adversely affected in the advanced economy. 

According to the RBI governor, banking turmoil in the US and Switzerland is a confluence of rising interest rates and unrealised losses in the debt securities portfolio. "Co-existence of high inflation and banking stress is complicating the responses of the central bank as they face a trade-off risk between either straining the global markets or having to tolerate longer periods of high inflation," said Das. 

He said that amidst these global uncertainties too, the Indian global banking system remains stable and resilient with stable capital and liquidity positions, improving asset quality, better provisioning coverage, and improved profitability. 

The governor further said that the RBI is fine-tuning the Central Bank Digital Currency (CBDC) architecture based on the experience so far.