Outgoing Reserve Bank of India (RBI) Governor Shaktikanta Das on Tuesday highlighted some of the challenges facing the Indian economy and the central bank, including tackling the growth-inflation balance, cyber security risks and rapidly changing geopolitical dynamics.
In his last press conference on Tuesday, Das asserted that during his six-year tenure as RBI governor, the coordination between the finance ministry and the Reserve Bank has been “best-ever”.
On Monday, Sanjay Malhotra, a 1990-batch Indian Administrative Service officer, currently serving as revenue secretary in the finance ministry, was appointed as the next RBI governor.
“As far as the RBI is concerned, restoring the inflation-growth balance is the most important task before the RBI. I am confident that the RBI team led by the new governor will take it forward,” Das told reporters.
The country’s gross domestic product (GDP) fell to a seven-quarter low of 5.4 percent in the second quarter of FY25, while consumer price inflation (CPI), or retail inflation, hit a 14-month high of 6.21 percent. St. in October 2024. The entire geopolitical and geo-economic dynamics are rapidly changing with the changing world order by Das. “In such situations, one always needs to be alert and nimble and I am confident that RBI will definitely excel,” he said.
The Governor said that cyber security threats and related risks are a major challenge for every authority, not only in India but globally and especially for central banks. “Over the last six years and even earlier, we have been paying a lot of attention to the issue of cyber security, and dealing with cyber challenges and threats. New challenges (related to cyber security) are emerging and this will be an ongoing task for every central bank in the world, including the RBI,” he said.
Das said that in the last six years, RBI’s focus has been on leveraging capital as much as possible to take advantage of new technologies. He highlighted some initiatives like setting up RBI Innovation Hub (RBIH) in Bengaluru and regulatory sandbox where many innovative ideas and thoughts are encouraged and approved.
Talking about Central Bank Digital Currency (CBDC), or e-Rupee, Das said that RBI has been a pioneer in the domain of digital currency. Referring to CBDC as the “future of currency”, Das said it has great potential in the coming days. He said that the Unified Lending Interface (ULI) will be a game changer and expressed the belief that it will soon be operational nationwide.
The Governor said that the RBI has paid a lot of attention to financial inclusion but it is an ongoing task. When asked about the relationship between the government and the RBI while completing his 6-year tenure, Das said that there was excellent cooperation and coordination between the two. He said, ‘The relationship between the Ministry of Finance and the RBI has been excellent.
The governor said that the government and the RBI have worked closely together to deal with several challenges such as the spike in inflation caused by Covid and wartime inflation in Ukraine. When asked about the market perception that when a governor comes from the finance ministry, he will act according to the government, Das said RBI governors keep in mind the needs of the broader economy.
“The views of the Ministry of Finance and the Central Bank may differ at times. It happens all over the world. During my tenure, we have managed to solve all such problems through internal discussions. I want to emphatically say that when a governor comes in, he looks at the broader economy,” he said.