Outgoing Reserve Bank of India (RBI) Governor Shaktikanta Das addressed the media on his final day in office, stating that the slowdown in India's economic growth is due to multiple factors, not just the repo rate set by the RBI.
Speaking on his final day as Governor, Das explained that the slowdown in India’s economic growth was the result of multiple factors, not solely the RBI’s repo rate. He clarified, "Growth is impacted by a multiplicity of factors, not just one factor of, you know, the repo rate."
Das, who served as RBI Governor for six years, oversaw critical periods, including the Covid-19 pandemic and major geopolitical upheavals such as the wars in Ukraine and the Middle East. During his tenure, the RBI kept interest rates at elevated levels for nearly two years.
The RBI's Monetary Policy Committee (MPC), under his leadership, maintained a status quo on rates in 11 consecutive meetings. Despite pressure from Union ministers like Nirmala Sitharaman and Piyush Goyal, who publicly called for rate cuts, Das defended the RBI’s approach. "We are convinced that what we have done was the best option available... under the circumstances," he said.
Das stressed that the priority for the RBI moving forward would be restoring the balance between growth and inflation. He noted, "Restoring the growth-inflation balance is the most important task ahead for the Reserve Bank of India."
Das also expressed confidence in India’s economic resilience, stating, "The Indian economy is resilient and robust and has the capacity to deal with global spillovers very effectively."
Das was optimistic about the RBI's future under his successor, Sanjay Malhotra, who he believes brings broad experience to the institution. “Sanjay Malhotra has a very wide experience and will do the best for the institution,” Das said.
He also addressed the impending changes in the MPC, with the upcoming committee to have a majority of members with limited rate-setting experience. However, Das saw no issue with this, stating that such changes are a normal part of the institution’s evolution.
Reflecting on his tenure, Das recalled challenges, particularly the YES Bank crisis, where the RBI ensured that a consortium led by State Bank of India provided the necessary capital to stabilise the bank. He noted that this experience led to sharper supervision, which is now a hallmark of the RBI’s approach.
Das also addressed the RBI’s increased use of business restrictions on regulated entities, explaining that the central bank strives to engage with entities before imposing such measures, but once restrictions are in place, it is open to easing them when compliance is demonstrated.
On a broader note, Das acknowledged the growing importance of cybersecurity, stressing that the RBI’s approach to the fintech sector had been misunderstood by some. "The notion that the RBI is too harsh on the fintech sector is incorrect," he said.
In his farewell, Das expressed gratitude to Prime Minister Narendra Modi for the opportunity to serve as RBI Governor, as well as to Finance Minister Nirmala Sitharaman for her continuous support. He also thanked the entire RBI team, stating, "Together, we successfully navigated an exceptionally difficult period of unprecedented global shocks."
Looking to the future, Das hoped for the nationwide launch of the Unified Lending Interface (ULI) and for the advancement of Central Bank Digital Currency (CBDC), which he sees as the "future of currency."
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