Indian Economy Making Solid Recovery: RBI Governor

 

The Indian economy has made a solid recovery and is among the fastest-growing large economies despite intense uncertainties and formidable headwinds affecting the growth of economy, said Reserve Bank Governor Shaktikanta Das.  He also added that the financial stability is non-negotiable and all stakeholders in the financial system must work to preserve this at all times.

“The Reserve Bank and the other financial regulators remain steadfast in their commitment to safeguard financial stability in the face of potential and emerging challenges,” said RBI Governor in his Financial Stability Report (FSR).

Over the last three years, the global economy has been facing continuous high-amplitude shocks such as COVID-19 pandemic waves, protracted geopolitical hostilities like wars, rapidly changing monetary policies and the recent banking turmoil.

Balancing the policy trade-offs, preserving macroeconomic and financial stability, shoring up confidence and supporting sustainable growth are top priorities for policymakers around the world in these tough times.

Economic fragmentation is threatening macroeconomic prospects, especially among emerging market and developing economies (EMDEs), he said.

Despite these concerns, the global and Indian financial systems have recorded somewhat different track since the last issue of the FSR in December 2022.

Because of the banking turmoil in the US and Europe, the global financial system has been impacted by significant strains since early March this year as US-based Silicon Valley Bank and Signature Bank collapsed.

Contradictory to the global financial situations, the financial system in India has been stable and resilient, as reflected in sustained growth in bank credit, low levels of non-performing assets and adequate capital and liquidity buffers. Both banking and corporate sector balance sheets have been strengthened, engendering a ‘twin balance sheet advantage’ for growth, and reach and depth of financial intermediation are being aided by technology and growing digitalisation that provides new opportunities for growth .

It has to be remembered that seeds of vulnerability often get sown during good times when risks tend to get overlooked, he said.

International cooperation and regulatory focus are also needed to tackle other challenges such as cyber risks and climate change, he said.

Through its G20 presidency, India is striving to improve the power of multilateralism in several areas. These efforts are very much visible in India’s theme for G20: One Earth, One Family, One Future.

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