RBI MPC meeting: Focus shifts to price stability as Sanjay Malhotra decodes India growth scene

In his remarks during the MPC rate meeting announcements, Reserve Bank of India governor Sanjay Malhotra underlined that in the long term, there is no tussle between price stability and growth.

Stability in price is a necessary condition for growth as it helps maintain purchasing power, imparts certainty to households and businesses in their savings and investment decisions, the governor observed. Besides, it also facilitates a benign interest rate environment and good financial conditions, he added.

All these factors come together to "foster consumption, investment and overall activity", Malhotra highlighted.


Moreover, it is crucial for equitable growth and shared prosperity because its absence is disproportionately burdensome on the poor, he said.

The governor, however, added that "while price stability is a necessary condition, it is not sufficient to ensure growth."

A supportive policy environment is vital; this is even more important during periods of high uncertainties such as the current times, Malhotra noted.

"At the Reserve Bank, therefore, while price stability remains the focus of monetary policy, we are not oblivious to putting in place complementary monetary and credit policies and regulations that support growth and prosperity," he commented.

In his speech, the RBI governor said that on both inflation and growth fronts, the Indian economy is progressing well and broadly on expected lines. "Strong macroeconomic fundamentals and benign inflation outlook provide space to monetary policy to support growth, while remaining consistent with the goal of price stability," he added.

In an increasingly uncertain global environment like today's, it has even become even more critical to keep the focus firmly on domestic growth, while sustaining price stability.

"Today’s monetary policy actions should be seen as a step towards propelling growth to a higher aspirational trajectory," the governor said.