After the Russian-Ukrainian war at the end of February 2022, which also led to a worsening of the inflationary situation in India due to limited supply, the Reserve Bank of India (RBI) put inflation first and then growth. However, retail inflation eased to an annual low of 5.72 percent in December 2022, within the RBI’s comfortable range of 2 percent to 6 percent for the second month, according to data released by the Department of Statistics and Programmes. Implementation (MoSPI) on January 23 showed. RBI Governor Shaktikanta Das even said last week that “inflation has started to come down” and “the current account deficit seems manageable.”

Is it time for the RBI to focus on growth?

When Rahul Joshi, editor-in-chief of the Network18 group, spoke exclusively to Union Finance Minister Nirmala Sitharaman two days after she presented the budget on Feb. 1, she said that while she generally would not want to run RBI, “the pressure on the central bank decreased.”

Asked if the RBI could be more relaxed about monitoring, tightening and supporting growth in the coming months, Sitharaman said: [the government] been at it for some time. The fall in inflation does not seem momentary or monthly. He must support himself in the process of descent. There shouldn’t be that much pressure on the central bank to keep raising rates. But the Monetary Policy Committee (MPC) will answer the call.”

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Explaining why they should prioritize inflation over growth, Das said in May 2022 that the main goal of the RBI before the war between Russia and Ukraine was to focus on growth and allow inflation to reach 6 percent. “Periodically during this period, inflation jumped to 6% or more; once or twice it even reached 7 percent … “

Retail inflation in India accelerated to a five-month high of 7.41% in September. It was the ninth month that consumer price index (CPI)-based inflation remained above the RBI’s upper margin of 6 percent and rose despite the central bank’s efforts to curb it. Retail inflation was 7.04% in May, 7.01% in June, 6.71% in July, 7% in August and now 7.41% in September.

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Retail inflation reached an annual low of 5.72% in December 2022, mainly due to lower food prices.

In December, the RBI Interest Board revised down its forecast for real gross domestic product (GDP) growth to 6.8%. “Even with this revision to our growth projections, India will still remain one of the fastest growing major economies,” Das said. However, the World Bank has revised upward its forecast for India’s fiscal year GDP growth to 6.9% due to robust economic activity in the country, up from 6.5% previously estimated. According to the latest World Bank India Development Bulletin, it is expected that that retail inflation will be 7.1% in 2022-2023.


According to the Ministry of Foreign Affairs, the banking system as a whole is also now stable. “Both the RBI and the Financial Stability Board (FSB), which meets every six months, know that the Indian banking system, which has survived the double balance sheet problem, is at a comfortable level … With their non-performing assets (NPA) dropping to an absolutely low level, there is a recovery, their position is very strong. This reflects that when they go to collect money in the markets, they are absolutely comfortable….All the macroeconomic analysis that any expert would do would show how comfortable the banks are…,” the Foreign Minister said.

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A “double balance sheet problem” is a situation in which corporations are, on the one hand, overleveraged and, on the other hand, banks are saddled with bad loans.

“Twin deficiency is not as severe as it used to be. When exports fall, you will have a current account deficit… It is also growing. Imports also continue to rise and fall. Monthly fluctuations should not bother us. If there is a steady decline every month, but no signs of growth are predicted, we should be worried. Monthly fluctuations should not worry us,” she said.

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The double deficit problem occurs when the budget and current account deficits rise at the same time. A budget deficit occurs when spending exceeds income.

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