KOCHI: Amid the turmoil in the global financial markets, the Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said the Indian economy remains resilient and is expected to be the fastest-growing major economy in the world.
Speaking at the K P Hormis Memorial Commemorative Lecture, instituted in memory of the founder of Aluva-headquartered Federal Bank, here, the RBI governor also said that India's external debt was "within manageable limits" as per all international standards and methods of assessment. In contrast, the aggressive monetary policy and tightening by central banks since early 2022 and the consequent appreciation of the US dollar have led to several economies with a high share of external debt becoming highly vulnerable to debt distress. He said India would post a growth rate of 7% this year.
"Our financial sector remains stable; the worst of inflation is behind us; and the Indian Rupee has exhibited the least volatility among its peer currencies," Das said. Commenting on the recent developments in the US banking system, the RBI governor said it has brought to the fore the criticality of banking sector regulation and supervision. India has been able to avoid the global meltdown due to the significant strengthening of RBI's supervisory systems in recent years through measures that include a unified and harmonised supervisory approach for commercial banks, NBFCs and urban cooperative banks.
"These developments in the US drive home the importance of ensuring prudent asset liability management, robust risk management and sustainable growth in liabilities and assets; undertaking periodic stress tests; and building up capital buffers for any unanticipated future stress," the governor said.
Das said India has assumed the leadership position of G20 in an environment of formidable geo-economic shifts, which have vitiated the global macroeconomic outlook. Globalisation of inflation to multidecadal high levels and subdued global growth and trade have posed complex policy challenges to almost every country in the world. According to him, the ongoing global crisis is an opportunity and major test for the G20, which represents 85% of the world GDP and 75% of global trade.
Of the multiple risks facing the world community, Das said the surge in inflation has posed a complex monetary policy dilemma in every economy between raising interest rates enough to tame inflation and at the same time minimizing the growth sacrifice to avoid a hard landing.
Federal Bank Chairman C Balagopal and MD & CEO Shyam Srinivasan spoke on the occasion.
US rout shows dangers of cryptocurrencies
The rout in the US financial markets brought out the dangers of cryptocurrencies and similar assets, according to RBI Governor Shaktikanta Das. "They (troubles in US financial markets) also bring out that cryptocurrencies/assets or the like can be a real danger to banks, whether directly or indirectly. He said the RBI has taken necessary steps in all these areas.