Don't expect a big jump in current account deficit: RBI Guv Shakikanta Das

The RBI governor said that inflation projection will be realistically given in next monetary policy committee meet due to take place in June

The Reserve Bank of India entered another phase of coordinated action between fiscal and monetary authorities to control inflation, Governor Shaktikanta Das said on Monday, as he added that the measures announced by the Union government will have a sobering impact on inflation.

Das, speaking to CNBC TV18, said that the inflation projection will be realistically given in the next monetary policy committee meet due to take place in June.

The inflation rate last year came down several times to near 4 per cent, Das said, adding that the RBI's target was to tolerate it up to 6 per cent.

The recovery of economic activity in India is gaining traction, the RBI governor said.

We don't expect a big jump in the current account deficit, Das said, adding that the bank will be able to manage current account deficit comfortably this year.

He said that the rising imports point to the revival in domestic demand.

"Have a sense that government will maintain the fiscal deficit target" this year, Das said.

The RBI governor told the channel that the bank will bring down liquidity in a calibrated and phased manner and will normalise the same within two to three years.

Earlier in May, the central bank’s monetary policy committee (MPC) had voted unanimously to increase repo rate by 40 basis points (bps) in an off-cycle meeting to tame inflation.

Speaking about the rate hike, the RBI governor said that the rate action was not unexpected.

The RBI Governor said that the interest rate in almost every country is negative in current date, adding that India will move towards positive real interest rates.

There is no one-to-one correlation between increase in one expense and government's borrowing, Das said. He added that the bank will ensure non-disruptive completion of government borrowing.