Addressing the media at the CII National Council Meeting, Das said that the RBI will come out of the withdrawal of liquidity measures very smoothly. “We will ensure abundant liquidity to meet the requirements of the productive sectors of the economy. Rs 17 lakh crore liquidity support was provided,” he added.
In the face of rising inflationary pressures, analysts and experts had predicted a hike in rates and a change in its stance. Governor Das on Monday said that the RBI resisted expectations of monetary policy reversal. “RBI resisted all temptations of moving away from the accommodative stance to support growth. We foresaw inflation moderating going ahead,” Das said.
“RBI continues to remain supportive of growth. We are conscious of our primary responsibility to maintain price stability and keep inflation under control,” he added.
Talking about the Indian economy, Governor Das talked about the nearly 60 high-frequency indicators that the RBI tracks and said that the Indian economy now is far better placed. “A prospect of stagflation doesn’t exist for India. Don’t see a situation of CPI topping 6% on a continuous basis,” he said.
“Don’t see a situation where India will face any sanction”
Das said that the RBI took the necessary measures to cope with the adversities arising due to COVID and ensured the market functioned normally, be it the money market or the forex market. “Our focus was to reduce the cost of money. So, we cut the repo rate by 75 basis points. Soon we found the financial market to be freezing, so announced liquidity measures,” added Das. Be it coping with the geopolitical tensions or COVID situations, Das said that the RBI’s approach has always been going beyond the rule book.
On the condition of banks, Das said the banks are well-capitalized with a system-level capital adequacy ratio at 16. Gross NPAs have fallen to a record low of 6.5%, he said.
Allaying the rising fears of a current account deficit, the Governor said that India won’t face any challenges in financing it. “Our CAD was very low in the run-up to the war, our forex reserves are also very high at $622 billion,” he said.
“We are closely watching the crude price swing and commodity cycles. We have to watch inflation dynamics. We are confident of dealing with any emerging challenge,” Das added. “We don’t know today for how long crude oil will remain high. The situation today remains impossibly uncertain,” said Das.