RBI governor Shaktikanta Das says his target is to keep 'Arjuna's Eye' on inflation

RBI Governor Shaktikanta Das said the central bank is focused on bringing inflation down. Quoting from Mahabharata, the RBI chief said: “Arjuna was aiming at the eye of the revolving fish during the Swayamwar in Mahabharata; surely he would have examined the surroundings. No one can match Arjuna, but our target has been to keep Arjuna's eye on inflation.”

He was speaking at an event a day prior to the a meeting of the Monetary Policy Committee — the central bank's rate-deciding panel — to discuss a report to be submitted to the government explaining the reasons behind its failure to bring inflation under control for three straight quarters.

Das said retail inflation has remained above the upper end of RBI’s tolerance limit of 2-6 percent and the central bank’s projections suggest high price pressure for the rest of the year.

The RBI governor said he was aware there have been “lots of discussions" about why RBI is not publicly releasing its letter to the government. He also said the letter the RBI sends to the government is written under the law, and the central bank does not have the privilege to release it to the media before it gets to the addressee.

"MPC minutes of the meeting are meant for the wider economy. The letter will be available to the public at some point. I ensure that transparency is not being compromised," Das said.

Though the November 3 meeting might not take any call on tightening, Das said India was seeing the triple shocks of COVID, war in Ukrain, and financial market turmoil and has to remain prepared for "whatever comes ahead".

"India’s economy bounced back in 2021-22 and sustained next year. If we had prematurely started tightening, how would that kind of recovery have been possible?" he asked.

He said there has been a slippage in inflation targeting, but it would have been "very costly for the economy had it not been for RBIs timely action".

The RBI launched the pilot project for the central bank digital currency (CBDC) or e-rupee on Tuesday. Das praised the launch of the e-rupee and said it was a landmark moment in the history of the currency in the country, which will transform the way business is done.

He said the RBI would try to launch the CBDC in a full-fledged manner shortly, depending on learnings from CBDC and digitised Kisan Credit Card loans.

"Cannot give a target date for when the CBDC will be launched at full scale because we want to tread carefully," he said, adding the RBI wants to ensure the entire process is non-destructive.

The pilot will see nine banks, including SBI, Bank of Baroda, HDFC Bank, Yes Bank, Kotak Mahindra Bank and ICICI Bank, settling secondary market transactions in government securities.