Shaktikanta Das attributes growth slowdown to multiple factors, not just repo rate

Outgoing Governor of the Reserve Bank of India (RBI) Shaktikanta Das said on Tuesday that the growth slowdown is due to a multiplicity of factors, and not due to the Reserve Bank’s repo rate. Last week, RBI’s Monetary Policy Committee (MPC) kept the benchmark interest rate unchanged at 6.5 per cent for the 11th consecutive policy meeting.

Earlier, Finance Minister Nirmala Sitharaman and Commerce and Industry Minister Piyush Goyal flagged high bank interest rates as a growth dampener when growth slowed down. India’s GDP slowed to 5.4 per cent in the second quarter (July-September) of 2024-25, the third consecutive quarter of slower growth. This was the lowest growth rate in seven quarters.

Das said the Indian economy is resilient and robust, and has the capacity to deal with global spillovers very effectively.

Addressing the media, on his final day at RBI, the governor said that restoring the inflation-growth balance is the most important task ahead for the Reserve Bank. India’s retail inflation rate increased to 6.21 per cent annually in October, up from 5.49 per cent the previous month, driven by a sharp increase in prices of food products, particularly the vegetables.

He also mentioned that RBI’s supervisory framework had significantly improved during his term, enhancing its ability to address systemic challenges.

Das also highlighted that financial inclusion as a cornerstone of his tenure, crediting Unified Payments Interface (UPI) for transforming access to banking services which was launched during his tenure. He added that he will be watching the pan-India rollout of Unified Lending Interface, a digital platform to streamline and speed up the loan approval process. ULI is expected to help borrowers avail credit while ensuring that lenders process customer information with ease.

On challenges, Das identified cybersecurity as a growing global challenge, particularly for central banks. “We have given lot to attention to cyber security. That is a continuing task. It will be a continuing challenge for every central bank including RBI,” he said.