Taming inflation is the top priority for South Asian countries as risks to growth and investment outlook could rise if price pressures persist at high levels, Reserve Bank of India governor Shaktikanta Das said on Friday.
Speaking at an event organised by the International Monetary Fund in New Delhi, Das said policy challenges for the region have been accentuated due to the Covid-19 pandemic and the war in Ukraine. “The priority for South Asian region, including India, is taming inflation; risks to growth, investments may rise if inflation remains high,” he said.
Das said that the Indian government and the RBI are in discussion with South Asian countries to have cross-border trade in Rupee. Further, he also said that the Central bank digital currency (CBDC) is currently in its trial phase and that the RBI is moving very carefully and cautiously on that front.
The Asian Financial crisis of 1997 impacted South Asian countries in terms of surges in capital outflows & exchange market pressures. Over the years, as a crisis prevention strategy, the South-Asian countries prioritised sound macro-economic policies, Governor Das said.
Earlier at the event, IMF Deputy Managing Director Antoinette Sayeh said that India is in a relative “bright spot” in the world economy, but needs to leverage its existing strength in services exports and extend it to job-rich manufacturing exports.
“Macroeconomic policies are responding to the significant headwinds, with fiscal policy measures supporting vulnerable groups and monetary policy addressing persistently high inflation.”