India's economic stability faces a risk from unpredictable and overlapping surges in food prices, according to Reserve Bank of India (RBI) Governor Shaktikanta Das.
This concern comes even though inflation has recently eased slightly.
In September, India's retail inflation dropped to 5.02 per cent, a three-month low, primarily due to more affordable vegetable prices. However, it's worth noting that this figure still exceeds the RBI's desired target of 4 per cent.
Speaking in Japan, Das emphasised that the RBI's monetary policy remains cautious and committed to reducing inflation progressively to meet the target while simultaneously supporting economic growth, as reported by Business Standard.
The central bank predicts that inflation will average 5.4 per cent in the fiscal year 2023-24, an improvement from the 6.7 per cent recorded in the last fiscal year.
The RBI has kept its key policy rate unchanged for the past four meetings as part of its strategy to keep inflation in check.
The retail inflation data for October is expected to be released on 13 November.
Governor Das also acknowledged the growing challenges in the global economy due to recent developments in West Asia.
He mentioned that the RBI has increased foreign exchange reserves to prepare for potential uncertainties.
While India's growth remains steady, the current account deficit is considered manageable, and the balance sheets of banks and companies are in good shape, as noted by the RBI governor.
Additionally, Das suggested the possibility of exploring a connection between India and Japan's fast payment systems, aiming to make cross-border payments more efficient and cost-effective.
Nayan Dwivedi is Staff Writer at Swarajya.
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