Shaktikanta Das bids farewell as RBI Governor, highlights inflation-growth balance as a key challenge

Mumbai: Outgoing Reserve Bank of India (RBI) Governor Shaktikanta Das said on Tuesday that restoring the balance between inflation and growth will be the central bank’s most critical task in the coming years. Speaking at a press conference on his final day in office, Das reflected on his six-year tenure, which was marked by unprecedented global and domestic challenges, and shared his expectations for his successor, Sanjay Malhotra.

“Restoring the growth-inflation balance is a complex task but a necessary one,” Das stated. He expressed confidence in the Indian economy, describing it as “resilient and robust, with the capacity to deal with global spillovers very effectively.” However, he acknowledged that global uncertainties and domestic challenges require careful navigation to ensure sustained growth while keeping inflation in check.

Das, on his final day as RBI Governor, shared a series of posts on X expressing gratitude. He thanked Prime Minister Narendra Modi for the opportunity to serve and for his guidance, Finance Minister Nirmala Sitharaman for her support, and various stakeholders for their inputs and suggestions.

“A BIG thank you to the entire Team RBI. Together, we navigated an exceptionally difficult period of global shocks,” he wrote, wishing the central bank continued success.

Revenue Secretary Sanjay Malhotra is set to take over as the new RBI Governor on Wednesday. Das expressed optimism about his successor’s ability to steer the institution. “Sanjay Malhotra has vast experience, and I am confident he will carry forward the transformational initiatives we have undertaken,” he said.

Das highlighted the importance of advancing key projects such as the Central Bank Digital Currency (CBDC) and the Unified Lending Interface (ULI), calling them “the future of currency and lending.” He also emphasised the need to continue promoting financial inclusion and addressing cyber threats, which he identified as a growing concern.

Das’s tenure, which began in December 2018, spanned significant events, including the COVID-19 pandemic, geopolitical tensions like the Ukraine war, and ongoing financial disruptions. Reflecting on these challenges, he said, “The focus was always to ensure stability and minimise risks to the financial system, even during the most turbulent times.”

One of the most defining aspects of Das’s tenure was his handling of monetary policy. The RBI maintained interest rates at elevated levels for nearly two years, with the Monetary Policy Committee (MPC) opting for a status quo at 11 consecutive meetings. Justifying this approach, Das said, “We aimed to make monetary policy as appropriate as possible given the prevailing economic conditions and future outlook.” He dismissed simplistic interpretations of the repo rate’s impact on growth, noting that “growth is influenced by a multiplicity of factors, not just interest rates.” The Indian economy’s growth slowed to 5.4 per cent in the September quarter, its lowest in nearly two years, largely due to a slowdown in manufacturing and mining. However, Das maintained that the slowdown was driven by broader economic factors beyond monetary policy.

Das highlighted the strong coordination between the RBI and the finance ministry during his tenure. “The relationship between the government and the Reserve Bank has been at its best in these six years,” he asserted. While he acknowledged that differences in perspective are natural, he underscored that all issues were resolved through internal discussions. “The RBI and finance ministry may see things differently at times, but we’ve always managed to find common ground,” he added. This collaborative approach stood in stark contrast to the strained ties between the RBI and the government under Das’s predecessor, Urjit Patel. Patel’s tenure saw conflicts over central bank autonomy and financial governance, culminating in his resignation in 2018.

Das recounted some of the critical moments during his governorship, including the rescue of YES Bank. “We ensured that taxpayer money was not used to bail out the bank and instead facilitated a consortium of lenders led by SBI to inject the necessary capital,” he explained. The experience led to stronger regulatory supervision, which he described as “much sharper today.” The outgoing governor also defended the RBI’s increased intervention in regulating financial entities. He noted that restrictions are imposed only after prolonged discussions and lifted promptly once compliance improves. “Our aim is always to strengthen the system without being unnecessarily harsh,” he said.

Looking ahead, Das underscored the importance of technological innovation and cybersecurity in the financial sector. He rejected claims that the RBI is overly strict with the fintech sector, stating, “Our focus is on fostering a secure and inclusive digital financial ecosystem.”

He also expressed hope for the nationwide rollout of the ULI, which aims to streamline lending processes and improve access to credit. On the CBDC, Das remarked, “It’s not just about convenience; it’s about the future of currency itself.” Das, 67, reflected on his journey from a bureaucrat to one of India’s most high-profile central bankers. “I had said when I assumed office that I would uphold the professionalism, credibility, and autonomy of the RBI, and I believe I’ve done my best,” he said. On whether he would return to public service, Das replied, “I have no specific plans right now. I’ll decide my future moves in due course.”

He dismissed speculation about a possible extension that would have made him the longest-serving RBI governor. Instead, he used his final day to interact with staff and deliver a farewell address. “The RBI is a great institution with a rich legacy, and I feel privileged to have been a part of it,” he concluded.