Coordinated steps needed globally to deal with slowdown: RBI Guv

The Reserve Bank of India Governor, Shaktikanta Das, on Monday said there is a need for coordinated action by various economies confronted with slowdowns.

“Globally, there should be coordination action to boost growth. European Union is experiencing stable growth for last two quarters. We find that there is space for fiscal action in many European countries. In the US economy, there are marginal signs of pickup and today, we (RBI) are ahead of the curve,” Das said at Times Network India Economic Conclave in Mumbai.

“We must do whatever is necessary to recover from the slowdown,” he said.

Das highlighted some key growth drivers for India and said it is necessary to become a part of the global value chain. He said e-commerce and startups offer new opportunities. “India should focus on manufacturing and be part of global supply chain. Spending on infrastructure by both central and state governments would be key for growth,” he said.

He said RBI’s focus is on growth and inflation and the underlying tone is financial stability. “To ensure better and higher credit flows, RBI has taken various steps,” he added.

He said RBI is taking steps to strengthen the banking system. “I don't know why the market was surprised by the recent pause in policy rate cut. There is a space for more monetary action. I do hope events will unfold and prove that the MPC was right,” he said.

The central bank earlier this month decided to keep key policy rate unchanged at its fifth bimonthly money policy review for this financial year in a move that surprised markets, which had been expecting at least 25 basis points rate cut.

Das said RBI’s mandate is also to maintain financial stability. “The relative emphasis between inflation and growth would depend on the macroeconomic scenario,” he said.

He said this is a period of uncertainty, but it is good that efforts are being made to remove this haziness. “During the past couple of year, everybody said global growth has slowed down due to trade tensions and Brexit. There has been a positive development as far as Brexit is concerned,” Das said, adding that some elements of certainty are coming in there.

“Growth is an issue of discussion in the Indian economy,” he said. “Global growth does impact India’s performance. In 2008, when the global financial crisis surfaced, multilateralism was at the forefront. Today, it is no longer there,” he pointed out.

Das said in a survey done on 1,539 listed manufacturing companies and their unaudited statements for the first half, it was found that such companies have increased their investment in fixed assets. “These companies have deleveraged in the first half and many have not availed of their working capital loans completely,” he added.

He said a process of balance sheet clean-up is now under way at corporates, banks and NBFCs to aid future growth. “The Supreme Court judgment on Essar Steel has unclogged a major hurdle in NPA resolution,” he said.