RBI Governor / Why is inflation not under control? RBI governor explained the reason, hope for relief

Business | Despite all the efforts of the Central Reserve Bank, inflation is not under control in the country. In the Hindustan Times Leadership Summit 2022, Central Reserve Bank Governor Shaktikanta Das has mentioned the reasons for rising inflation. Along with this, he talked about important issues related to the economy including rupee, digital currency, foreign exchange reserves.

Why inflation is not controlled: Shaktikanta Das said that the world economy is going through a period of stress. He has attributed mainly 3 reasons for this situation. Shaktikanta Das said that the world economy including India is under stress due to the crisis arising out of the Kovid epidemic, war between Ukraine-Russia and the financial market. According to the RBI governor, at present the GDP growth figures of the country are fine. India's economy is growing faster than the global level. Inflation figures are also now slowly being controlled.

Expectation of relief from October figures: He hoped that the inflation figures of October would be a relief as compared to September. The RBI governor pointed out that retail inflation is likely to be below 7% in October. Shaktikanta Das also said that if inflation is above 6% for three consecutive quarters, it is a failure of monetary policy.

Under the Reserve Bank Act, if the target fixed for inflation has not been achieved for three consecutive quarters, then the RBI will have to give a report to the central government giving detailed information about the reason and the steps taken to prevent inflation. This is the first time since the monetary policy framework came into effect in 2016 that the central government has to submit a report.

Shaktikanta Das said that even at this time our foreign exchange reserves are in a very good condition. The rupee weakened due to changing global conditions and the intervention of the Central Reserve Bank was needed.

RBI Governor said that the world is changing, the way business is done is changing. You have to keep pace with the times. The expenses in printing of paper notes, printing cost, purchase of paper, logistics, storage etc. are high. Digital currency will be less expensive going forward. This will be very important for cross border transactions and cross border payments.