Shaktikanta Das's term ends amid rising inflation, GDP slowdown
Subscribe to enjoy similar stories. Mumbai: Shaktikanta Das will step down as the 25th governor of Reserve Bank of India (RBI) on Tuesday, at a time when the war on inflation is ongoing and economic growth has taken a sudden slow turn. Union ministers Nirmala Sitharaman (finance) and Piyush Goyal (commerce and industry) had called for rate cuts after GDP growth slowed to 5.4% in the July-September quarter.
But Das stuck to the RBI’s inflation targeting mandate and held the repo rate steady on 6 December following his last meeting with the central bank’s monetary policy committee (MPC). Das, one of RBI’s longest-serving governors, took charge in 2019 following his predecessor Urijit Patel’s sudden departure. One of his first actions was to set up a committee under former RBI governor Bimal Jalan to review the central bank’s economic capital framework, which includes the size of capital reserves that RBI should hold.
Following the recommendations of the committee, the RBI has been transferring its surplus to the Centre each year. Das, who joined RBI from the department of economic affairs at the Centre, played a crucial role in handling the economic impact from the covid-19 pandemic. Under his leadership, the MPC cut policy rates to a historic low of 4% and infused liquidity into the system through direct and indirect measures to help the economy hit by lockdowns.
While the MPC prioritised growth over inflation during the pandemic, it changed gears to focus on inflation after the Ukraine war erupted in 2022. For at least a year thereafter, RBI hiked rates by 250 basis points, which brought inflation down from 7.8% to 4.25%. However, food and fuel price shocks kept inflation above MPC’s medium term target of 4%, forcing the
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