Effective fiscal-monetary coordination was core for India’s success amid a series of adverse shocks: RBI Governor

Speaking at the High-Level Policy Conference of Central Banks from the Global South in Mumbai, Das outlined the measures undertaken by RBI to ensure macroeconomic stability amid global challenges.

“Effective fiscal-monetary coordination was at the core of India’s success in the face of a series of adverse shocks. From this perspective, macroeconomic stability becomes a shared responsibility of both monetary and fiscal authorities,” he said, highlighting the collaborative efforts that contributed to India’s economic resilience.

Das acknowledged that demand-pull pressures were eased due to effective supply management by the government, which alleviated supply chain disruptions and moderated cost-push inflation. These efforts played a pivotal role in maintaining price stability in India while supporting growth.

Reflecting on the structural reforms undertaken in recent years, Das said they had significantly transformed India’s economic framework. He highlighted the introduction of the Flexible Inflation Targeting Framework, the implementation of the Goods and Services Tax (GST), and the enactment of the Insolvency and Bankruptcy Code (IBC) as key milestones.
He said, “Implementation of the nationwide Goods and Services Tax, and enactment of the Insolvency and Bankruptcy Code, brought about a paradigm shift in the Indian economy and helped in raising the medium and long-term growth potential of India”These reforms, according to the governor, brought about a “paradigm shift” to the country’s economy, enhancing India’s medium- and long-term growth potential.

The Governor also elaborated on the RBI’s policy responses during recent challenges. He noted that inflation became a significant concern even as growth impulses are strengthened.

“We responded to the need of the hour by changing the stance to withdrawal of accommodation, followed by front-loaded rate hikes. Therefore, whether it was the pandemic-induced growth slowdown or the war-induced surge in inflation, monetary policy responded appropriately to address both the objectives of inflation and growth,” he said.

Das’s remarks highlighted India’s proactive approach to the economic management and its ability to adapt to evolving global and domestic challenges.