Prime Minister Narendra Modi on Monday spoke of the RBI’s priority of growth. He also went on to add stability and trust. Does the government now want the RBI to focus on growth?
Das: The Prime Minister talked about growth, he also spoke on trust and stability. Therefore, my understanding is that what the Prime Minister said is in line with what is provided in the RBI Act with regard to inflation targeting. He (PM Modi) also used the word balance.
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Real interest rates are high. Will there be a growth sacrifice due to such high real rates?
Patra: You should assess the level of the real rate in terms of the distance at which inflation is from the target. Even going 12 months forward, inflation is not at target. That is our primary objective that we must align inflation with the target. Real rates do matter. But we need to see that inflation aligns with the target; that is the primary objective of monetary policy.
The growth projection for FY25 is kept at 7 per cent. The RBI earlier said growth could be closer to 8 per cent in FY24. What will slow down growth in the current financial year?
Patra: The 8 per cent will provide a base effect on to FY25. But the momentum is still as strong as it is in FY24, because it’s a year-on-year growth.
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Do you think the moderate fall in core inflation is indicative of weak consumer demand? Also, there is a cost to building reserves. Are you considering that cost as well? Are you looking to continue building Gold reserves?
Das: We are building up gold reserves. You can compare the gold reserve that the RBI is holding. That is a part of our reserve deployment. All aspects while building up the reserves are assessed and then we take a decision. About the core inflation, in the policy statement, I have said very clearly that urban consumption remains strong and rural consumption has recovered and is gaining.
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What is your view on the electoral bonds data that is published by the Election Commission of India following the Supreme Court directive?
Das: On electoral bonds we have no comments. It's a Supreme Court judgment which has to be complied with and which has been in pursuance of the Supreme Court judgment. I think the bank involved, State Bank of India (SBI), has taken the required action. So we have no comments on the Supreme Court verdict or on the issue of electoral bonds.
Are we getting to a standstill as far as rate transmission is concerned?
Patra: If you look at the transmission over a period of time and not a single period in time. Let’s say between April and February, there is still transmission going on. In January, there was 13 basis points of increase in fresh loans. We are still seeing a little bit of transmission going through. We feel that as mobilising of deposits takes place at higher and higher rates there will be further transmission in the lending rates. So, we are still seeing transmission.