RBI Governor Shaktikanta Das Image Credit source: Reuters
According to the figures of May 2023, the retail inflation rate may have come under control, but it is still more than 4 percent. Its effect on the ground can still be seen on the common man. The Reserve Bank of India itself has admitted in its monthly bulletin that it is troubling the people and the country’s economy is also bearing its brunt in a way.
In fact, it has been said in the RBI bulletin that due to high retail inflation, there has been a change in the spending pattern of the common man. His spending on goods and services has decreased. Due to this, the sales and profits of corporate companies are also getting affected and that is why private investment in the economy is decreasing.
What is the condition of the country’s economy?
Inflation and its effect on the economy have been explained in detail by RBI in its article ‘State of the Economy’. It says that consumer spending can be increased only after bringing down inflation and keeping it stable. This will increase the revenue and profitability of the corporate. This would be a better incentive to increase private investment in the economy.
RBI Governor Shaktikanta Das said that the Monetary Policy Committee (MPC) is aware that in 2023 the pace of economic activity at the global level will slow down. The reason for this is the increased inflation, tight financial conditions and geopolitical situation.
He said that monetary policy has recently started to soften, but the environment is still volatile. If inflation remains above the level of the rest of the world, then the trend of this softening can be changed. Shaktikanta Das further added that there is a need for constant monitoring in view of the inflation situation, especially at a time when the impact of El Nino on the monsoon is uncertain.
RBI has kept the policy repo rate constant at 6.50 percent. Whereas in 2023-24 the level of inflation is estimated to be above 5 percent. The Governor said that the figures of Foreign Direct Investment (FDI) coming to India show that in 2022-23, an investment of $ 28 billion came inside the country. This is less than $ 38.6 billion in 2021-22.
