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“Marginal Impact” Of The Ukrainian War On The Indian Economy, Says RBI Governor


The “marginal impact” of the Ukrainian war on the Indian economy, the RBI governor said

The Indian economy is in a better position today, and there will be a “small impact” from the Ukraine war, RBI Governor Shaktikanta Das said on Monday, while addressing industrialists at the National Council Meeting of the Indian Industry Confederation or CII.

Speaking on the economy and the risk of stagflation, Mr Das said India’s economic position was much better today.

“India is far from such a prospect. You have to look at the target. We expect inflation in India to moderate. I don’t see a situation in India where inflation continues to exceed the levels we have set,” he said.

The impact of Ukraine will be small on growth targets. Let us remember when you make assumptions based on crude oil on commodity prices; you assume the figure will last for 365 days.

The situation today is uncertain. The prospect of stagflation in India does not arise with all the volatility, the RBI governor added.

Asked about concerns of widening the current account deficit in the wake of the surge in oil prices from the Russo-Ukrainian war and supply concerns, he said that India was comfortable tackling the challenge of financing the current account deficit.

We are confident of tackling any challenges that arise, he added.

On liquidity, he said the central bank had put in ₹ 17 lakh crore over the past two years and would ensure adequate funds needed by the economy.

Leading industry entrepreneurs who attended the event were Adi Godrej, TV Narendran, Sanjeev Bajaj, Keki Mistry from HDFC Bank and other leading industry faces. They will interact with the governor on issues facing the industry coming out of the epidemic.

The Bank has good capitalization with a system -level capital adequacy ratio of 16; gross non -performing assets (NPAs) fell to a low of 6.5 percent, the RBI Governor said.

The trend towards globalization is being challenged; there is a disturbance. But the world will restructure to meet the challenges, he said.

We monitor several high frequency indicators in RBI: more than 60 high frequency indicators are tracked. And mostly in the green, the governor said.

The Russia-Ukraine conflict has affected the crude oil market, with Brent crude rising more than 3 percent on Monday to more than $ 112 a barrel following supply concerns.

Mr Das said the surge in crude oil prices would drive the world towards green energy.

“The oil crisis caused by the Ukraine issue will push faster towards renewable energy. We will see a faster transition to green and renewable energy due to the shortage of crude oil,” the RBI governor said.

There will be a resurgence of investment in fossil fuels as well as many who will be forced to increase supply. In India, we have a transition path towards green energy.

When asked about the National Infrastructure Finance Bank, the governor said, “Rs 20000 crore is the beginning. It is not the end. It is open to the Government to increase. While allowing leverage to exceed nine times, risks need to be taken into account.”

The government is concerned about the debt -to -GDP ratio. Each authority also needs to ensure stability and sustainability while looking at growth. We have received a highly considered call. If the situation requires, we will do it, he said.

On sanctions and the impact of reserves, Mr Das said, “Quoting our Prime Minister, India does not believe in expansion, and our reserves are diversified. We do not expect any sanctions. Why talk about problems that do not exist? Our reserves are in a position to be. good. “

Speaking on the risks from last week’s US Federal Reserve rate hike and the expected aggressive rate hike trajectory, Mr Das said the spillover of the US Fed rate hike remained mixed. We stopped buying assets last year; we are ahead of the US and the others ahead of it.

“Two of the largest economies are moving in different directions. We will be able to maintain the stability of the Indian rupee, regardless of the overflow,” he added.

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