Inflation to be higher in Oct, eco giving mixed signals: Shaktikanta Das
MUMBAI: RBI governor Shaktikanta Das said Oct inflation numbers would be worse than 5.49% headline in Sept. The governor also indicated that he was not in any hurry to cut rates, stating that a change in stance does not mean an immediate reduction in interest rates. According to Das, the data on economic growth was mixed, but the positives outweighed negatives.
“Oct CPI inflation numbers are again going to be very high, perhaps higher than Sept number. We had warned about it in monetary policy statement.” The governor said data available in Oct monetary policy meeting indicated an uptick in food, metal, and commodity prices. “We had flagged these risks,” said Das.
On economic outlook, Das said agriculture, services, exports and manufacturing were seeing robust growth but there were significant risks due to geopolitical factors and commodity prices. “I would not rush to say economy is slowing down. I would wait. The Aug rains have been a factor that has affected economic activity and there is still data coming in.”
On recent actions to ask some finance companies to cease and desist from undertaking operations, Das said RBI had taken action against only four out of 9,400 NBFCs and action is always calibrated, selective and preceded by bilateral engagement. He said RBI follows a “corrective rather than punitive” approach, with reasons shared transparently. “There are many more cases where RBI did not take action after a warning due to compliance from the regulated entity.”
The governor said following RBI’s signal to banks to ensure they have enough deposits to fund their credit growth, many lenders have complied, but there were a few outliers.
Das said there was no hard data to establish that money raised by way of unsecured loans was being deployed in stock markets. There is anecdotal evidence that money is going into the markets. What is necessary is that the banks themselves need to also look at the end use of the unsecured loans they are extending,” said Das.
