RBI Governor Shaktikanta Das said incoming data on GDP growth was mixed but the positives outweighed the negatives.

Central Bank Governor Shaktikanta Das said on Wednesday that incoming data on economic growth was “mixed” but the positive factors outweighed the negative ones.

Speaking at Business Standard’s annual BFSI event here, Das emphasized that underlying economic activity remains strong overall.

“Incoming data is mixed, but the positives outweigh the negatives and underlying activity remains strong overall,” Das said.

It can be noted that many analysts expressed concerns about growth, especially after official data showed that growth fell to 6.7 percent in the first quarter of FY25, the lowest level in the last 15 quarters.

However, the RBI maintains its real GDP growth forecast of 7.2 per cent for FY25, although some expect it to be lower than 7 per cent.

Das said the RBI tracks over 70 high-speed indicators to arrive at its estimates and explained both the positive factors that pull the number up and the negative factors that pull it down.

Industrial production or IIP data and slowdown in urban demand by FMCG companies are negative factors. Additionally, Das said subsidy expenses increased in the September quarter and will affect the GDP figure in the second quarter.

Das said the positives include significant growth in GST e-way bills, toll collections, air passenger traffic and steel and cement industry performance.

Amid the recent increased debate on the prospects of the automotive industry as well as concerns over rising stocks due to low demand, Das said the industry has performed exceptionally well with a growth of 30 per cent in October, which includes a 23 per cent increase in sales of four-wheelers.

Das also said that the agriculture and service sectors are also doing well.

After some analysts said that the economy was in a cyclical growth slowdown, the RBI governor said, “I would not be in a hurry to declare the economy slowing down.” he said.

When asked to recall animal analogies regarding inflation and to choose the animal that defines the Indian economy, Das said that the national animal “tiger”, which is also featured in the RBI logo, best describes the country.

He said the economy has the strength of a tiger, while the RBI provides “agility”, another important feature of the tiger.

On inflation, Das said the October headline consumer price inflation figure to be announced on November 12 will be higher than September’s 5.5 percent, but added that the central bank has already drawn higher figures for the next two months.

Das stated that the change in stance in monetary policy should not be seen as a harbinger of a rate cut at the next meeting of the interest rate setting panel, adding that the panel is not under any pressure regarding the next action plan.

On the regulatory and supervisory actions against four non-banking entities recently, Das reiterated that the RBI has taken action against a very small number compared to the total number of NBFCs (non-banking financial companies) at 9,400.

Claiming that the central bank’s actions were “calibrated, selective and measured”, Das said such decisions were not sudden and were taken after months of bilateral discussions with an institution.

It can happen only if an organization rejects or delays the RBI’s recommendations for taking such measures, Das said, adding that the number of organizations identified as needing improvement is much higher than the organizations against which action is taken.

Stating that detailed reasons for why an action was taken were presented to the organization, Das underlined that these actions were “corrective” rather than “punitive” in nature; here the RBI rolls back the measures if it sees that improvements are desired.

Das said the RBI was working quickly to understand the use of borrowed funds used for gambling in capital markets, adding that the phenomenon did not pose a major risk to the banking sector or lead to “systemic instability”.

The Minister urged banks to look at the utilization of funds even in unsecured loans and admitted that it is very difficult to monitor the same.

Das said the RBI does not have a set loan-to-deposit ratio for banks, adding that this ratio has increased to 80 percent at the systemic level in the last few months.

However, he also admitted that there were a few entities that were outliers in this regard.

The quality of credit commitments and the ability to sustain credit growth are two important aspects that the central bank looks at when understanding credit growth, Das said. He also made clear that the central bank has no view on credit growth.

He said the RBI is constantly trying to “sniff around” and be preemptive in detecting and remediating risks before they become a systemic problem.

Replying to a question on the future of central bank digital currency (CBDC), Das said the RBI is in no hurry to launch the pilot project at the national level now and added that new use cases are emerging, such as Odisha’s cash transfer. support to beneficiaries under a plan or some companies transferring lunch coupons to employees’ wallets.