Acknowledging that the current economic slowdown has come unprecedented, Reserve Bank of India governor Shaktikanta Das on Monday stated that the growth numbers looked worse than what was anticipated. "The growth numbers certainly look worse than we had predicted. The GDP growth of 5 per cent is a surprise," Das told CNBC in an interview.
The RBI governor also cautioned that the surge in oil prices in the aftermath of Saudi Aramco attack may have some impact on India's current account deficit and fiscal if the situation lasts longer.
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Das also informed that the government was on a sticky wicket, but fully aware of its fiscal challenges. He added that the monetary policy committee (MPC), headed by him, had clearly recognised signs of slowdown. "The narrative is very clear... Monetary policy has a certain role in the economy, it cannot play all roles; all stakeholders, including private sector players, have to play their part," Das urged other entities to stay cautious.
Das assured that the MPC was looking into areas where it can improve the forecasting methods. In addition, the upcoming MPC on October 4 will take a view on GDP growth projection in the MPC meet.
However, Das attributed the rise in inflation to hike in prices of eggs and milk products, adding that a small hike in flood inflation might prove beneficial for farmers. "Food prices are usually cyclical within a year and don't expect cereals and vegetable production to be under much pressure," he further observed.
