India stays on path of fiscal consolidation: RBI Deputy Governor
Poonam Gupta, Deputy Governor of Reserve Bank of India (RBI) has said that India has stayed on the path of fiscal consolidation, even as deficits and debt have risen in many other countries. Its general-government debt is projected to decline by about 9 percentage points of GDP by 2031-32, and it faces neither rollover risk nor runaway risk.
On the growth front, she said India stands out. It is the fastest-growing large economy, and unlike the emerging market and developing economies (EMDE) aggregate, its growth projection has been revised up over the past year. That growth has rested more on domestic sources lately, particularly private consumption and public investment, but new drivers have emerged, including private investment and merchandise exports.
On the inflation front, RBI Deputy Governor noted that India’s track record on inflation over the last ten years has been equally credible. Since the adoption of flexible inflation targeting, inflation has declined structurally, has remained within the tolerance band in most years, and has become less volatile. The Monetary Policy Committee (MPC) and the RBI remain committed to the inflation-targeting framework.
Apart from this, she also highlighted that India’s financial sector is on a strong footing. Banks’ capital adequacy is at 17.7 per cent and the gross NPA ratio at a multi-decadal low of 1.8 per cent, and stress tests show that banks would remain well capitalised even under severe scenarios. Further she said ‘We nevertheless remain watchful of spillovers from global financial markets, as well as of cyber and climate risks.’
