“The RBI remains committed to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward,” Patra said Friday.
He said that holding rates steady and retaining the accommodative monetary policy has served the Indian economy well so far as the economy is poised to grow faster. According to RBI’s projection, India’s economy will grow at 9.5 per cent in FY22.
“We are on course to becoming among the fastest growing economies of the world, but there is far to go. Private consumption and investment are still work in progress. The restoration of livelihoods and the revival of MSMEs is a formidable task that lies ahead,” the deputy governor said.
Despite facing the risk of falling behind the curve in raising policy rates amid rising prices, India held its ground and is among a few countries that have continued with accommodative monetary policy to propel growth. In contrast, several emerging market economies are tightening monetary policy and advanced economies are announcing policy normalization in response to rising inflation.
“Only time will tell whether or not India has got it right but so far, this approach has served us well and helped in charting a course into the future which is different from the world,” Patra said, while delivering the annual CD Deshmukh Memorial Lecture.
CD Deshmukh was the first Indian governor of RBI. He later became the Union Finance Minister.
RBI unleashed a series of measures including some unconventional ones since March 2020 to navigate the economy amid the severe disruptions caused by the Covid-19 virus.
Patra said that RBI’s measures had contributed significantly in engineering the turnaround in the Indian economy, supported by rising financial inclusion and digitalization.
“The lessons of the pandemic will be imbibed and the RBI will emerge stronger and more resilient than before, and committed to its mandate of price stability, keeping in mind the objective of growth,” he said.