Mussoorie (Uttarakhand): Amid global slowdown and weakening trade, the Reserve Bank of India (RBI) has been striving to boost economic growth in the country when inflation is under control, its Governor Shaktikanta Das said on Monday.
Even after more than a decade of the global financial crisis and six years after taper-tantrum, the global economy is still not on a stable growth path, he said.
"Following an upward swing in 2017, there has been growing evidence that global growth and trade is weakening. Unsettled trade tensions and developments around Brexit are imparting further downside risks to the outlook," said Das while addressing a gathering at the Lal Bahadur Shastri National Academy of Administration here.
"Therefore it has been our endeavour in the RBI to ensure price stability under the flexible inflation targeting regime and simultaneously focus on growth when inflation is under control," he said.
In a flexible inflation targeting framework, a delicate balance needs to be maintained between inflation and growth objectives. Das said the relative emphasis on inflation and growth depends on the prevailing macroeconomic scenario, inflation and growth outlook and signals emerging from incoming data.
Post global financial crisis, it has been recognised that price stability may not be sufficient for financial stability and therefore financial stability has emerged as another key consideration for monetary policy, though the jury is still out as to whether it should be added as an explicit objective of monetary policy.
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"The fact remains that though the focus of the monetary policy is mainly on inflation and growth, the underlying theme has always been financial stability," he said.
While India emerged relatively unscathed from the global financial crisis, there should be no room for complacency. As a member of several multilateral institutions, India actively participated in post-crisis reforms of the international regulatory and supervisory framework under the aegis of the G20 and the Basel Committee, said Das.
"From the perspective of the RBI, we will continue to focus on effective communication and coordination with all stakeholders to achieve broader macroeconomic objectives of price stability, growth and financial stability," he said.
In the non-banking sector, the RBI has come out with draft guidelines for a robust liquidity framework for non-banking financial companies (NBFCs). It is also giving a fresh look at its regulatory and supervisory framework.
"It is our endeavour to have an optimal level of regulation and supervision so that the NBFC sector is financially resilient and robust. The RBI will continue to monitor the activity and performance of this sector with a focus on major entities and their inter-linkages with other sectors," said Das.
