RBI will stick to pushing economic growth at this stage: Deputy guv MK Jain

"The inflation concerns are valid but we have to prioritise growth at this stage", deputy governor MK Jain said at a webinar

The Reserve Bank of India will stick to pushing growth of the economy at this stage, said deputy governor MK Jain on Friday. 

“The inflation concerns are valid but we have to prioritise growth at this stage”, he said at a webinar, even as he acknowledged that real interest rates in the economy may now be negative. 

He also said the forthcoming Financial Stability Report of RBI would show the NPA situation of the banks have been contained. “Without getting into numbers let me say the gross NPAs of the banks may end up a little bit lower than March 2020, while that of NBFCs may end up a little higher, but not out of the range”. He also said the numbers collated from the banks by the RBI do not indicate any major slippages from the large corporates. 

The deputy governor said he was hopeful that there will not be any “flood” of cases in the bankruptcy courts. “By and large the stress in the corporate sector has been managed well and has been recognised”. 

The last Financial Stability Report issued in December had projected the NPAs of the banking sector to surge to 13.5 per cent of advances by September 2021, from 7.5 per cent in September 2020 under the baseline scenario. Jain said the report when it was issued did not have the actual reported data from March 2020 due to lockdown. The forthcoming report has access to the actual data, he said.

Concerns on inflation have flared up in the Indian economy as it recovers from the shock of two Covid waves. The wholesale price index has moved up to 12.94 per cent and even the consumer price inflation, which the RBI tracks as the benchmark has reached 6.30 per cent in May. The RBI’s mandate is to keep the CPI at 4 per cent with a maximum headroom of plus or minus 2 per one. Jain was speaking at the webinar organised by India International Centre and RIS on the theme of Resilient Financial System and Governance on Friday.