RBI Governor Das meets FM Sitharaman ahead of former's term coming to end

The meeting took place at the finance minister's North Block office. Sources said that the meeting lasted around 20 minutes and was considered customary following the MPC meeting

Reserve Bank of India (RBI) Governor Shaktikanta Das met Finance Minister Nirmala Sitharaman on Saturday evening, a day after the meeting of the Monetary Policy Committee (MPC) and just ahead of his term coming to an end on Tuesday. The meeting took place at the FM’s North Block office.

 

Sources said the meeting lasted around 20 minutes and was considered customary, post the MPC meeting.

 

The Centre had announced a three-year extension to Das’ tenure in 2021, a month before his term came to an end, making him one of the longest serving RBI governors in its 90-year history. 

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The RBI’s six-member MPC on Friday had decided to keep the policy repo rate unchanged at 6.5 per cent — a status quo for the 11th straight time — maintaining a “neutral” stance. It had lowered the 2024-25 gross domestic product (GDP) growth projection to 6.6 per cent from 7.2 per cent. 

 

The December policy review came against the backdrop of the GDP growth rate declining to 5.4 per cent in the July-September quarter. Also, retail inflation breached the central bank’s tolerance band of 2-6 per cent to stand at a 14-month high of 6.2 per cent in October.

 

“The MPC remains committed to restoring a balance between inflation and growth, which got unsettled recently,” Das said, indicating that the near-term inflation and growth outcomes in India had turned somewhat adverse since the October policy. 

 

There has been a seeming discomfiture within the government over higher interest rates impinging economic growth with a slowdown, particularly in urban demand. Sitharaman had recently called on banks to make interest rates more affordable, describing the current high cost of borrowing as “very stressful”.  

 

Her comments came days after Commerce and Industry Minister Piyush Goyal made a case for the RBI to cut interest rates to boost economic growth by looking through the high food inflation while deciding on monetary policy.