RBI Policy
More confident of Indian econ than few months ago, says Patra
This story was originally published at 15:51 IST on 9 October 2024
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--RBI Patra on geopolitical risk: More confident of India econ vs few mos ago
--RBI Patra: Geopolitical tensions one factor in overall balance of risks
--RBI Patra: Building up buffers against spillovers from geopolitical risk
--RBI Patra: Medium-term outlook for crude has softened
--RBI Patra: Crude outlook softened on lower demand, shift to renewables
--RBI Das: CAD likely to remain at sustainable levels
--RBI Das: FX reserves crossed a new milestone of $700 bln
NEW DELHI – The Reserve Bank of India has been building buffers against global spillovers from the escalating geopolitical tensions and is more confident about the Indian economy now than it was a few months ago, Deputy Governor Michael Patra said Wednesday. "We have also been building up buffers against spillover from the rest of the world. I think we are more confident on the evolving situation for India than we were a few months ago," Patra said, addressing a post-monetary policy press conference.
There have been at least two ongoing wars--Russia-Ukraine and Israel-Iran--for a year now. The RBI has been actively stocking up its foreign exchange reserves at every opportunity and has added almost $56 bln to its kitty so far this financial year started April. India's foreign exchange reserves touched the $700-billion mark and rose to a record high of $704.89 bln in the week ended Sept. 27.
Earlier announcing the monetary policy statement, Governor Shaktikanta Das said India's external sector remains resilient as key external sector vulnerability indicators continue to improve. "We remain confident of meeting our external financing requirements comfortably," he said.
The governor said the buoyancy in services exports and strong remittance receipts are expected to keep India's current account deficit within sustainable levels. India's current account deficit widened to $9.74 billion in Apr-Jun, against a surplus of $4.59 billion in Jan-Mar, and a deficit of $8.95 billion in the first quarter of 2023-24 (Apr-Mar).
Asked about the rationale behind the RBI lowering the assumption for the average price of India's crude oil basket to $80 a barrel for Oct-Mar from the earlier $85 a barrel for the current financial year, Patra said that the medium-term outlook for crude prices has softened due to multiple factors. Crude oil prices have risen almost 10% this month amid mounting geopolitical tensions in West Asia.
Patra cited the decision of the Organization of the Petroleum Exporting Countries and allies to roll back production cuts in a phased manner through 2025 and the projection of the International Energy Agency that the crude oil demand will be softer. Increasingly, renewables gaining a greater share in electricity generation has also contributed to a softer outlook for crude oil, he said. End
US$1 = INR 83.95
Reported by Pratiksha
Edited by Saji George Titus
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