RBI Governor Exclusive: Shaktikanta Das On The Economy, Growth, Interest Rates - Bloomberg Event
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
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.