Reserve Bank Governor Shaktikanta Das on Friday said the monetary policy has to be “clearly and unambiguously” focused on inflation in an environment like the current one, where growth is steady. Amid a debate around neutral rates, Das said “theoretical and abstract concepts” as arrived at are based on a person’s judgment and cannot determine the policy in the real world. It can be noted that the RBI has been steadfastly maintaining the status quo on interest rates, and there is increasing dissent among some members of the rate-setting panel who are in favour of rate cuts to promote economic growth lately. Replying to those who flag the impact on growth because of the elevated interest rates, Das said that the growth has been robust even with the current interest rates and added that RBI is optimistic that its 7.2 per cent real GDP expansion estimate for FY25 is being achieved.
Moreover, the nowcast team is pointing towards a 7.4 per cent growth in the June quarter as against the monetary policy committee’s expectation of 7.3 per cent, he said, adding that the momentum will continue into the Q2 as well. In the last three years, the average growth of India has been 8.3 per cent, he said. Growth is remaining steady. Now, we have to focus clearly and unambiguously on inflation, he said, speaking at an event.