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Reserve Bank of India (RBI) Governor Shaktikanta Das said that taming inflation is the top priority for South Asian countries like India as an unchecked price rise may pose risk to growth and investment outlook. He said rising levels of debt, alongside sustained price pressures, pose risks to the region's economic growth and both must be contained. He noted that multiple external shocks in the form of COVID-related global supply chain disruptions, food and energy crisis following the war in Ukraine, and financial market volatility arising from the aggressive monetary policy tightening have exerted sustained price pressures in the South Asian economies. During the first three quarters of 2022, food price inflation in South Asia averaged more than 20 per cent.

He said ‘while the recent softening of commodity prices and supply chain bottlenecks should help in lowering inflation going ahead, risks to growth and investment outlook may rise if inflation persists at a high level’. He said the region's heavy dependence on imported fossil fuels has made it vulnerable to imported fuel inflation. He said ‘for successful disinflation, credible monetary policy actions accompanied by targeted supply side interventions, fiscal, trade policy and administrative measures have become the key instruments’. He said ‘The approach to disinflation, however, needs to be mindful of the rising risks to the growth outlook in an environment of deteriorating prospects for global growth and trade activity’.

Apart from inflation, he said reducing external debt vulnerabilities, moving focus to highly productive sectors, strengthening energy security, cooperation on a greener economy and increasing tourism should be focus areas for the region. Underscoring the importance of multilateral agencies in assisting the countries in the region, he said ‘The surge in external debt in recent years and associated vulnerabilities have undermined macroeconomic stability in several countries of the South Asian region’. He said ‘The role of multilateral organisations, particularly the IMF and the World Bank, becomes crucial in making debt treatment efforts more effective, while also strengthening the mechanism of recording, reporting and analysis of debt data so as to enhance transparency and preserve debt sustainability’, and added deep structural reforms in the region were necessary.