RBI Governor Exclusive: Shaktikanta Das On The Economy, Growth, Interest Rates - Bloomberg Event
Exclusive: RBI Governor Shaktikanta Das speaks at the Bloomberg India Economic Forum in Mumbai. Watch, follow updates live here.
Watch Live: Shaktikanta Das On Economy
Reserve Bank of India Governor Shaktikanta Das is speaking at the Bloomberg India Economic Forum in Mumbai at 6:30 p.m, in his first public speech since India’s economic growth fell to a six-year low.
Look At The Brighter Side, Says RBI Governor
On being asked his view on the “grim” state of the economy, the RBI Governor reiterated that the mood of gloom and doom won’t help fix the problems.
You mention the economy being grim enough, I don’t want to enter into any adjective to describe the current state of the economy. There are challenges but one also has to look at the opportunities that are available. And the focus has to be on the measures to overcome the challenges. That should be the focus of every stakeholder in the economy.Shaktikanta Das, RBI Governor
How To Solve The NBFC Crisis
The RBI Governor said that the central bank will step in to take action on the NBFC problem only when it is required to.
“The first preference will be to a market mechanism to resolve the NBFC problem,” Das said. “Market mechanism would basically mean that the existing promoter go for stake sales, bring in new promoters, or they bring new money in their set up. There has to be inflow of resources either by stake sale or going for securitisation of assets.”
The resolution will have to be market-based. In this, the banks and other lenders will have a major role to play. Because in NBFCs where there are major governance issues, in such cases they need to take a larger haircut.Shaktikanta Das, RBI Governor
What The Government Can Do With Limited Fiscal Space
Shaktikanta Das said that the government’s fiscal headroom is “very limited” and hence they should keep doing administrative and policy tweaks that are aimed at ensuring that the “huge” budgetary resources are used efficiently.
“On the fiscal side the government has by and large remained prudent. They have not announced any counter cyclical measures in going for a fiscal expansion,” Das said. “They have taken some administrative and regulator measures with regard to auto sector, exports and banking.”
Most of these things are non-fiscal as they relate to administrative and policy matters which were acting as impediments. Now they have removed it.Shaktikanta Das, RBI Governor
He added that the RBI’s job is remain watchful of inflation and growth projections.
On RBI's Focus
Prudent external sector management with a close and continuous vigil in areas of external sector vulnerabilities assumes critical importance and will continue to receive the close attention of the RBI.Shaktikanta Das, RBI Governor
On Rupee
Shaktikanta Das said that the Indian rupee has see wide volatility over the last two years largely due to global spillovers.
Here’s what he said on the domestic currency.
- As governor of RBI, I am not taking a position on whether the currency is overvalued or undervalued.
- RBI does not have a target or band for level of exchange rate.
- IMF estimates the rupee's exchange rate variation to be zero.
- U.S. has already removed India from its list of currency manipulators.
On India's Capital Flows
India has adopted an approach marked by progressive liberalisation but calibrated to the realities of the domestic situation, including evolution of the financial markets.Shaktikanta Das, RBI Governor
RBI Governor Says India Resilient To 'Hostile' Global Economic Conditions
RBI Governor Das said that despite a “hostile” global economic environment, India has exhibited resilience and viability.
He listed out parameters that show how India is relatively insulated from the global slowdown:
- The current account deficit has averaged 1.4 percent of the GDP over the last five years inspite of global spillovers.
- Level of foreign exchange reserves at $425 billion on Sept. 13 is sufficient for 10 months of imports or 21 months of debt of residual maturity up to 1 year.
- Indian economy remains preferred habitat of FDI and is among the top destination of greenfield projects.
- Level of external debt at 19.7 percent is the lowest among emerging economies.
- Forex reserves covered 76 percent of the debt.
'Global Growth Weak, But No Recession Yet'
The international environment is clouded with challenging conditions. Global growth is slowing down and central banks across the world are countering it by easing monetary policy. But, there is no recession yet.Shaktikanta Das, RBI Governor
RBI Governor Shaktikanta Das To Speak At Bloomberg Event
In his first important public speech since India’s first quarter GDP growth came in at 5 percent, the Reserve Bank of India Governor Shaktikanta Das is speaking at the Bloomberg India Economic Forum in Mumbai at 6:30 p.m.
Das’ comments will be keenly watched at a time when economic growth is at a six-year low, reeling under a slowdown where even an unprecedented four consecutive interest rate cuts have failed to help. What’s worse is that consumption has also slumped, adding to the concerns around a several-quarter weak private investment figure.
The speech also comes ahead of the monetary policy committee meeting next month. The MPC has already reduced rates by 110 basis points this year. And with inflation under its 4 percent target, economist expect more rate cuts on the way in response to the slowing growth.
Earlier, the RBI governor had said that the government is responding with “right measures” to fix the economy and the situation should improve soon.
His views on the transmission of interest rates by banks to borrowers through external benchmarking of loans will also assume significance. The RBI has been asking lenders to speed up the process so that the benefits of a rate cut can reach the consumers sooner. Last month, the government announced that all state-run lenders will benchmark their loans to the RBI’s repo rate.