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This Is What RBI Governor Shantikanta Das Said Today In The Monetary Policy Review

The RBI Monetary Policy Committee (MPC) has casted a ballot consistently to keep strategy repo rate unchanged at 4 per cent. Invert repo rate additionally stays same at 3.35 per cent.

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In accordance with assumptions, the RBI's Monetary Policy Committee (MPC) kept key interest costs unchanged on February 10 and held the accommodative stance in its first strategy meeting after Union Budget 2022. This is the 10th time in succession that the MPC headed by RBI Governor Shaktikanta Das has kept up with the state of affairs. The three-day RBI MPC meeting that started on February 8, closed today on February 10. 

Governor Shantikanta Das' Speech

RBI Governor Shantikanta Das in his speech today said that the MPC has kept both the repo rate and reverse repo rate unchanged at 4 per cent and 3.35 per cent respectively. Also, the panel continued with the so-called ‘accommodative’ stance in the backdrop of elevated level of inflation.

The RBI projected GDP growth for FY23 at 7.8 per cent. Real GDP growth of 9.2 per cent in FY22 will take economy above pre-pandemic level, he added.

On CPI inflation forecast Das said that for FY22 has been retained at 5.3 per cent. It expected to moderate closer to 4 per cent target in second half of FY23 and provide room for monetary policy to remain accommodative.

There has been some loss of momentum in the economic activity due to Omicron. Considering the outlook for inflation and growth, uncertainty related to global spillovers and Omicron, there's a need for continued policy support is warranted for the economy, he said further.

Rupee has shown resilience in the face of global spillovers. Current account deficit seen below 2 per cent of FY22 GDP. RBI is committed to smooth conduct of the government borrowing program. The cap of e-vouchers has been proposed to be increased from Rs. 10,000 to Rs. 1 lakh, Das said.

The RBI Governor continued saying that variable rate repo operations of varying tenors will henceforth be conducted as and when warranted. Second, variable rate repos and variable rate reverse repos of 14-day tenors will operate as the main liquidity management tool. Third, these operations will be aided by fine turning operations. Fourth, with effect from March 1, the fixed rate reverse repo and Marginal Standing Facility will only be available from 5:30-11:59PM on all days.

The bi-monthly strategy comes against the setting of the Budget wherein an ostensible net GDP of 11.1 percl cent has been assessed for 2022-23. The government anticipates that this development should be fuelled by a huge capital spending program outlined in the Budget so as to occupy private investment by revitalising monetary activities and building demand.

FM Nirmala Sitharaman raised capital expenditure (capex) by 35.4 per cent for the monetary year 2022-23 to Rs. 7.5 lakh crore to proceed with the public investment led recuperation of the pandemic-battered economy. The capex in the current monetary year is fixed at Rs. 5.5 lakh crore. The spending on building multimodal logistics parks, metro systems, highways, and trains is relied upon to spur interest for the private area as every one of the ventures are to be carried out through project workers.

In regard of borrowing, the government intends to get a record of Rs. 11.6 lakh crore from the market in 2022-23 to meet its expenditure requirement to set up the economy. This is almost Rs. 2 lakh crore higher than the current year's Budget estimate of Rs. 9.7 lakh crore. Indeed, even the net borrowing for the following monetary year will be the most elevated ever at Rs. 14,95,000 crore as against Rs. 12,05,500 crore in the Budget Estimate (BE) for 2021-22.

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