Global economic outlook not as grim, says RBI Governor Shaktikanta Das
The forward markets are giving a much more benign picture with regard to the oil prices. But we have been very conservative in our assessment, and our inflation projection of 5.3 percent for the whole year 2023-24, we have said that the risks are evenly balanced.
Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das addressed the media after the FM gave her customary address to the RBI Board of Governors following the Budget 2023.
In response to CNBC-TV18's query on whether factoring crude oil price at $95 dollar per barrel to peg the inflation at 5.3 percent was safe, Das said the risks are balanced and that the global economic outlook does not look as grim as it did about six months ago.
Q: In the MPC for FY24, you're projecting inflation at 5.3 percent. Have you factored in crude at around 95 odd to a dollar, slightly lower than the $100 benchmark that you had kept last year. So is that a safe number to go with given the geopolitical risks — Russia again has cut the output by around two lakh barrels per day, for instance. Second, sir, so far, there has been a price freeze on retail prices of fuel, petrol and diesel. So so far, whenever the projections have been made, or you have done it sans that impact and in case in the coming time, we don't know when, if the price fees goes away, depending on the international projections or whatever the market price is. So how do you see that trajectory impacting your inflation?
RBI Governor Shaktikanta Das: On the oil assumption yes we have assumed $95/barrel , the average this yr has been $93/barrel, starting at the beginning of the year after the war in Europe , oil prices crossed even $120/barrel , average is about $93/bbl, and all factors have been taken into consideration.
The forward markets are giving a much more benign picture with regard to the oil prices. But we have been very conservative in our assessment, and our inflation projection of 5.3 percent for the whole year 2023-24, we have said that the risks are evenly balanced.
So if the oil prices go down significantly and if there is advantage of other commodity prices, it will work to our favor, in terms of leading to lower inflation. But if the demand for oil due to opening up of the countries and due to the higher growth in other countries, then the commodity prices may go up. But having said that, I would like to add that as I said in my statement the other day, that the global economic outlook does not look as grim as it did, let's say about six months ago.
The talk of a deep recession in many countries, including advanced countries, that is behind us. Now, the talk around the world is either a softer recession, or just a global slowdown. So therefore the risks are evenly balanced. We have to wait and see how it plays out.
Q: SC has raised concerns on the Hindenburg-Adani matter, the Apex Court has suggested that the framework may have to be relooked with the finance and SEBI as a regulator. Also, there could be some corporate governance issues that need to be addressed. So how would you look at this scenario, your assessment here?
Finance Minister Nirmala Sitharaman: Obviously, you're not expecting me to say to you or to this gathering of senior journalists, what I will be saying in the court, that is one. Second, India's regulators and I'm sitting in the company of a very senior regulator, the one of the oldest regulators in this country. India's regulators are very experienced. And they are experts in their domain. The regulators are fairly seized of this matter, and they are on their toes, as always, not just now. So I would leave it there because you've just told me what has come out this morning. I will leave it there.
(Edited by : Pradeep John)
First Published: Feb 11, 2023 3:59 PM IST
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