RBI Governor Shaktikanta Das: Indian economy Improves well amid global slowdown
Governor of the Reserve
Bank of India Shaktikanta Das stated on Wednesday that despite increased
uncertainty and strong headwinds, the Indian economy has made a robust recovery
and remains one of the fastest-growing large economies. He stated that stability
in finances is non-negotiable and that all parties involved in the financial
system must always work to maintain it.
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“The Reserve Bank,
as well as other financial regulatory agencies, remains firm in their
determination to preserve financial stability amid potential and growing
challenges,” he stated in the Financial Stability Report (FSR)
foreword.
He said that in the
current unstable international environment, policymakers everywhere should
prioritize maintaining macroeconomic and financial stability, restoring public
faith in the economy, and promoting sustainable growth.
Over the past three
years, the global economy has had to weather a series of high-amplitude shocks,
including the COVID-19 pandemic waves, prolonged geopolitical tensions, the fast
tightening of monetary policy, and the recent banking disturbances.
He warned that economic
fragmentation poses a threat to the macroeconomic outlook, particularly in
emerging markets and developing economies (EMDEs).
The world and Indian financial systems have moved in
opposite directions since the previous FSR in December 2022.
Since the beginning of
March 2023, the banking upheaval in the United States and Europe has placed
major strains on the global financial system.
This year has already
seen the failure of two major US banks: Silicon Valley Bank and Signature Bank.
The largest Swiss bank, UBS, was bailed out in March by Credit Suisse.
The global and Indian
financial systems have taken slightly divergent paths since the last FSR was
published in December 2022, the report noted, adding that the global financial
system has been under substantial strain since early March 2023 due to the
banking disruption in the United States and Europe.
In contrast, it said
that India’s financial system has been robust and stable, with indicators like
low levels of bad debts, rising bank loans, and healthy capital and liquidity
ratios.
The ‘twin balance sheet advantage’ for growth is the
result of improved financial health in the banking and corporate sectors, he
said, while advances in technology and widespread digitalization are expanding
the scope and depth of financial intermediation to create fresh opportunities
for economic expansion and wider financial inclusion.
He argued that the
recent banking turbulence in some AEs was evidence that global standards on
financial sector rules needed to be reevaluated in light of new threats. He emphasized that,
while international cooperation among regulators on these challenges is
crucial, in India, regulators, and regulated firms must maintain their
focus and dedication to keeping the financial system secure.
It’s important to keep
in mind, he warned, that vulnerabilities are frequently sowed during prosperous
periods when hazards are more likely to be disregarded. Other threats, such as
cyber dangers and climate change, require international cooperation and
regulatory focus, he added.
India, as the current
G20 president, is working to increase multilateralism’s effectiveness in a
number of these fields. One Earth, One Family, One Future, India’s theme for
G20, captures these efforts admirably.
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