Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday announced the decisions taken by the central bank’s six-member Monetary Policy Committee (MPC). The high-powered rate-setting panel began its three-day brainstorming on Wednesday.
Das said that the fundamentals of the Indian economy remain strong with banks and corporates showing healthier balance sheets, fiscal consolidation on course, external balance remaining eminently manageable and forex reserves providing a cushion against external shocks.
“These factors, combined with consumer and business optimism, create congenial conditions for sustained growth of the Indian economy. Looking ahead, it is our endeavour to further build on these fundamentals which are the best buffer against global shocks in today’s uncertain world,” the RBI governor said.
The RBI also continued with its policy stance of “withdrawal of accommodation” to ensure inflation is in step with its target of 6%(+/-2), while supporting of economic expansion.
In simpler words, the central bank will be focused on curbing the money supply in the economy to control inflationary pressure.
The RBI left the benchmark policy rate (repo) unchanged in its four monetary policies. The repo rate refers to the rate at which commercial banks borrow money by selling their securities to the reserve bank. These rates are key to boosting credit and investments by businesses to boost economic growth.
Here are some of the key decisions taken by the Monetary Policy Committee
- RBI keeps benchmark interest rate unchanged at 6.5%
- Proposes to enhance UPI transaction limit for payment to hospitals and educational institutions from ₹1 lakh to ₹5 lakh.
- Hikes GDP growth projection for the current fiscal to 7%, from 6.5% earlier
- Pegs GDP growth in December, March quarters at 6.5%, 6%
- Retains average retail inflation projection at 5.4% for 2023-24
- Inflation outlook to be considerably influenced by uncertain food prices
- Intermittent vegetable price shocks could once again push up headline inflation in November and December.
- Forex reserves stood at $604 billion as of December 1, and remain confident of meeting external financing requirements comfortably