Reserve Bank of India Governor Shaktikanta Das in an exclusive interview with NDTV listed measures that must be taken for the Centre's vision for a 'viksit Bharat' or developed India by 2047.
'Viksit Bharat' or developed India by 2047 is the Modi government's vision to transform India into a developed nation. The year 2047 also marks 100 years of Independence from the British rule.
NDTV's Editor-in-Chief Sanjay Pugalia asked Mr Das what the challenges are to the Centre's vision of 'Viksit Bharat' and what measures should be taken to ensure India does not get stuck in the middle-income group nations, the RBI Governor said, firstly "We have to ensure price stability in the economy. It will increase a consumer's purchasing power as it builds confidence to buy goods."
The RBI Governor said as inflation increases, the purchasing power of the consumer gets affected, and price stability will be an important factor for growth.
Secondly, maintaining inflation is important to bring investor confidence and maintaining financial stability in banks and other institutions is important and as a regulator, the RBI must maintain that, Mr Das said.
Today, inflation is coming under control, but 4 per cent is still away. The Financial sector today is much more stable and resilient than it was earlier, he said.
"We are projecting 7.2 per cent growth this financial year. We are not seeing any major growth sacrifice. It remains stable and resilient," he added.
The RBI has to focus on how GDP growth and other economic activity will move and several important reforms have taken place in the last few years like the Monetary Policy framework, the Insolvency and Bankruptcy Code and Make in India have taken place in the past few years. Reforms in the agricultural sector, marketing, supply and labour have to be completed.
Mr Das added that India has to increase output in the agricultural sector, adding that the focus should be on merchandise exports, though the export of services from India is making its presence felt in the global markets.
On policy rate cut, Mr Das said, a decision on reducing the policy rate will depend on keeping inflation in check. Any reduction in the policy rate will also depend on future data, with inflation being the biggest influencer, the RBI chief added.
"We never said inflation would go below 4 per cent if you see the MPC meeting details carefully," Mr Das said, referring to the Monetary Policy Committee which reviews and fixes India's policy rate.
"What we seek is a durable alignment of inflation to target, meaning around 4 per cent. We need to have confidence that it (inflation) will stay around 4 per cent. We have to be patient. We need to cover more distance," the RBI chief told NDTV.
He said any adverse effect on growth due to not reducing the policy rate is "minimal and negligible".