Didn’t see growth slowing to 5%: Shaktikanta Das
RBI governor Shaktikanta Das (File photo)MUMBAI: RBI governor Shaktikanta Das has said that easing of growth in the first quarter of FY20 to 5% came as a surprise although signs of a slowdown were evident as early as February 2019. The governor said with growth coming sharply lower than the 5.8% seen by the RBI, the central bank is reviewing its forecasting.
“The first quarter number was a surprise. Everybody outside had projected around 5.5%, we had projected (gross domestic product growth) at 5.8%. While the July PMI numbers — which have come out lower — were not available then, we are examining internally if we have missed out anything,” said Das in an interview to ET Now.
According to the governor, while the RBI has cracked inflation forecasts by bringing down margin of error substantially, it was looking at areas for improvement in GDP forecasts. On future course of policy action, Das said that the RBI would wait for the Q2 numbers to see whether the slowdown continues.
“Many things have happened around the world. After the Saudi drone strikes, we have to see how durable the oil price rise can be and what kind of measures will the oil producers take to dip into reserves,” said Das. The other factor would be the impact of monsoon on domestic prices.
The governor said that the monetary policy committee had recognised the slowdown in growth momentum, which is why it went for a cut of 25bps (100bps = 1 percentage point) in February. “At the cost of remarks that the RBI is playing to the gallery, the monetary policy committee took a decision to cut rates recognising the slowdown,” said Das. This was followed by the statement that growth was the highest priority in August.
“In the current situation, every stakeholder and every policymaker will have to deal with, according to the space they have there. NBFCs have to find market-based solutions to deal with their situation. Regulators have to deal with the situation without diluting the principle of financial stability. The government has already made three rounds of announcements,” said Das.
“The first quarter number was a surprise. Everybody outside had projected around 5.5%, we had projected (gross domestic product growth) at 5.8%. While the July PMI numbers — which have come out lower — were not available then, we are examining internally if we have missed out anything,” said Das in an interview to ET Now.
According to the governor, while the RBI has cracked inflation forecasts by bringing down margin of error substantially, it was looking at areas for improvement in GDP forecasts. On future course of policy action, Das said that the RBI would wait for the Q2 numbers to see whether the slowdown continues.
“Many things have happened around the world. After the Saudi drone strikes, we have to see how durable the oil price rise can be and what kind of measures will the oil producers take to dip into reserves,” said Das. The other factor would be the impact of monsoon on domestic prices.
The governor said that the monetary policy committee had recognised the slowdown in growth momentum, which is why it went for a cut of 25bps (100bps = 1 percentage point) in February. “At the cost of remarks that the RBI is playing to the gallery, the monetary policy committee took a decision to cut rates recognising the slowdown,” said Das. This was followed by the statement that growth was the highest priority in August.
“In the current situation, every stakeholder and every policymaker will have to deal with, according to the space they have there. NBFCs have to find market-based solutions to deal with their situation. Regulators have to deal with the situation without diluting the principle of financial stability. The government has already made three rounds of announcements,” said Das.
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