Sanjay Malhotra, who took charge as the 26th Governor of the Reserve Bank of India on Wednesday, stressed on the need for stability and continuity in policy, in his first media interaction. But, at the same time, he also acknowledged that the central bank will have to remain "alert and agile" to meet challenges in this dynamic world.
"Stability in policy is very important. This is something even in my previous role we were trying to give stability and continuity in policy. So, whether its taxation, or fiscal or monetary policy, all businesses, all people do need this continuity and stability. While stability is important, we are also aware that the world is dynamic with geopolitical tensions, with the impact of climate change and political uncertainty around the world. We have to be conscious of this fact that while we do maintain continuity and stability, we can't be stuck to it," he said.
Malhotra was earlier the Revenue Secretary and replaces Shaktikanta Das whose six year stint as the RBI Governor ended on Tuesday.
Malhotra takes charge as the RBI Governor at a time the country is facing twin challenges of high inflation and slowing GDP growth.
"Ours is an economy that needs to develop as we are entering in this amrit kaal and to realise the vision of Vikasit Bharat as in 2047. There is huge responsibility that we have in ensuring the growth that this country actually has that continues," he said.
RBI is a prestigious institution and has a huge legacy, it has done some "commendable work" over the years, said Malhotra, adding that he would continue to uphold the legacy and take it forward.
Deepening financial inclusion also will continue to remain a key focus, he noted.
"One of the most important role of the central bank here is to spread financial inclusion. We have of course traveled a lot in financial inclusion, specially with regards to making available and accessible banks to the doorsteps of each and every nook and corner of the country. But, there is still more to be done," opined Malhotra.
He added that the need was to collaborate with financial regulators and central and state governments so that benefits of financial inclusion reached everyone. How technology can be further used to reduce costs and make financial inclusion more accessible, will also be a key pillar they will work on, he stated.
Tanvee Gupta Jain, chief India economist at UBS Securities, says the new governor will need to play a fine balancing act between inflation and growth.
"We think the new RBI Governor will need to balance growth risk (considering India's real GDP growth slowed more than expected to 5.4 per cent year-on-year in the September quarter) and recent headline CPI (consumer price index) inflation (6.2 per cent in October) still well above the RBI's medium-term target of 4 per cent," said Jain.
