MUMBAI: The Reserve Bank has to accord growth its “top most priority” even as it continues to maintain trust and stability of the financial system, Prime Minister Narendra Modi said here on Monday, inaugurating the year-long celebrations of the 90th founding day of the central bank.
Addressing the gathering that included top industrialists such as N Chandrasekaran, Mukesh Ambani and Anand Mahindra and topnotch bankers like Dinesh Khara and a bevy of others, Modi said the next decade is as important for attaining the goal of a developed nation as it is for the RBI, which will be completing 100 years in 2035.
He said according to the mantra of the monetary authority, which is a full service central bank, “The RBI should make faster growth as its top most priority along with focusing on trust and stability (of the nation’s financial markets).”
As the RBI prioritises growth as its top most goal over the next decade, it must ensure that rupee is made more accessible and acceptable globally and thus make our financial markets are less dependent on the developments overseas, he said. The economy grew at its fastest pace in the past six quarters in the December 2023 quarter, clipping at 8.4 percent--faster than the 6.6 percent estimated by economists, driven by robust manufacturing and construction activity. This has the government and RBI elevating their GDP forecasts to over 8 percent in the fiscal year to March 2024. Global rating agency Moody’s expects the country to remain the fastest growing G-20 economies near term.
In her speech, finance minister Nirmala Sitharaman highlighted the role played by the RBI in managing inflation and growth and credited the bank on its institutional credibility.
Modi lauded RBI for its successful efforts at taming inflation despite the headwinds from the pandemic and the ongoing two wars. Since early 2016, inflation has become the primary goal of the Reserve Bank under the inflation targeting framework, which has led to the bank being able to contain inflation to near-target from being in double-digits.
The Prime Minister’s focus on growth comes days ahead of the first monetary policy review of FY25 and in the midst of a blistering election season. The policy review is due on April 5. He said RBI, under the able-leadership of governor Shaktikanta Das, has helped his government take care of both financial prudence concerns as well as the requirements of the common man during the pandemic.
At a time when many countries of the world are still struggling to come out of the shocks delivered by the pandemic, our economy is creating new records, and is contributing as much as 15% of the incremental growth of the world economy now, Modi said. He said balancing inflation control and growth is a unique need for every developing country and urged everybody to study the right monetary tools to wrestle with this challenge. He called upon the RBI and the finance industry to become more self-reliance on the matters of finance and wants the RBI to take the pole position when it comes to the financial; markets and systems of the global south.