PM Modi with RBI Guv Das commemorating 90 years of the apex bank, in Mumbai, on Monday. Photo:
Credit: PTI Photo
New Delhi: Prime Minister Narendra Modi on Monday said the Reserve Bank of India (RBI) has done a good job in managing inflation and it should give top most priority to accelerating growth.
“The RBI should give fast growth its top-most priority, along with focusing on trust and stability,” Modi said while addressing the RBI’s 90th anniversary event in Mumbai.
The prime minister’s comments just two days ahead of the RBI’s monetary policy committee meeting. In its first meeting of the current financial year scheduled to be held April 3-5, the MPC is likely to keep key policy interest rates unchanged.
In order to control price rise the RBI sharply raised policy interest rates in 2022 and has left it unchanged since February 2023. Lower interest rates play an important role in accelerating growth.
Modi commended the RBI’s monetary policy committee role in managing inflation. Steps like active price monitoring and fiscal consolidation kept inflation at a moderate level even during difficult times of Corona, he said.
Highlighting the importance of creating a balance between inflation control and growth for any developing country, the prime minister asked the RBI to become a model for this and play a leadership role in the world, thereby supporting the entire global south region.
Speaking at the event RBI Governor Shaktikanta Das said the central bank’s evolution as an institution has been closely intertwined with the development of the Indian economy.
“The global turmoil arising from the COVID-19 pandemic and the ongoing geopolitical hostilities have tested the resilience of every economy in the world, including India,” Das said.
“The well-calibrated and co-ordinated monetary and fiscal policies adopted in our country went a long way in shielding our economy from these shocks and helped us emerge even stronger than before,” he added.
The RBI governor further noted: “It is a matter of satisfaction that today our GDP growth is robust; inflation is moderating; the financial sector is stable; the external sector remains resilient; and the forex reserves are at an all-time high.”
Finance Minister Nirmala Sitharaman said professional management by RBI has significantly improved India's capacity in dealing with external imbalances and uncertainties.
"The RBI, in fact, has been one of the earliest to recognise the non-transient nature of inflation. One of the few central banks, if I may say so, to front load policy rate hikes in particular," the finance minister said.
Modi released a commemorative coin to mark 90 years of RBI. India’s central bank is governed by the Reserve Bank of India Act, 1934. It began its operations on April 1, 1935.
“From being a central bank primarily concerned with allocation of scarce resources during the planning period, the Reserve Bank has transitioned into being an enabler for the market economy. We are a full-service central bank with our functions spanning multiple dimensions,” RBI governor Das said, highlighting the evolution of India's central bank in the past nine decades.