Reserve Bank of India (RBI) Governor Shaktikanta Das explained that the Covid-19 pandemic and the Ukraine war had exacerbated the region's policy challenges. Inflation has been driven by the region's heavy reliance on imported fossil fuels and food inflation averaging over 20% during 2022.
To successfully reduce inflation, Das emphasized the importance of credible monetary policy actions in conjunction with targeted supply-side interventions, fiscal trade policies, and administrative measures. In addition to inflation, Das identified reducing external debt vulnerabilities, focusing on highly productive sectors, strengthening energy security, cooperation on a greener economy, and increasing tourism as key areas of focus for the region.
India's Central Bank Chief Discusses Priorities for South Asia
RBI Governor Shaktikanta Das discussed the priorities for South Asian nations at an event organized by the International Monetary Fund (IMF). He emphasized the need to prioritize price stability in the current context, citing the potential risks to growth and investment caused by high inflation levels. Das also noted the region's heavy dependence on imported fossil fuels, which has led to fuel inflation, and food inflation averaging over 20% in the first three quarters of 2022.
To combat these challenges, Das emphasized the importance of credible monetary policy actions alongside targeted supply-side interventions, fiscal trade policies, and administrative measures. In addition to reducing inflation, Das identified reducing external debt vulnerabilities, focusing on highly productive sectors, strengthening energy security, cooperation on a greener economy, and increasing tourism as key areas of focus for the region.
IMF Deputy Managing Director's Comments on India's Economy
At an event organized by the International Monetary Fund (IMF), Deputy Managing Director Antoinette Sayeh commented on India's position in the global economy. She described India as a "bright spot" but highlighted the need to leverage its existing strength in services exports and extend it to job-rich manufacturing exports. RBI Governor Shaktikanta Das also addressed the potential for increased growth and employment opportunities by boosting intra-regional trade, which is currently only one-fifth of its potential in South Asia. Das added that the RBI and government are working to facilitate the rupee settlement of cross-border trade in the region to increase future trade potential.
