MUMBAI: Reserve Bank of India Governor Sanjay Malhotra has hinted that the central bank may not react to the current bout of inflation and spurt in credit growth. Malhotra took a noticeably calm tone, describing price pressures as present even if they are “a little bit high right now,” and attributing the rise largely to supply-side disruptions.“Inflation is also under control although it is currently a little high… This rise is primarily due to supply-side factors,” he said, adding that “our primary goal is price stability, growth is our secondary goal… These two goals are not contradictory. They are mutually supportive,” in a stance that suggests the RBI is willing to consider temporary hikes rather than stifling growth.In an interview with Doordarshan News, the governor said growth remains resilient despite global turmoil, supported by domestic demand and investment.
Credit is expanding rapidly at nearly 18% overall, with pockets such as MSMEs and gold loans growing at 24-25%. However, in contrast to the excesses we saw in microfinance two years ago, “we do not see immediate distress,” he noted, even as the Reserve Bank of India closely monitors fast-growing sectors to guard against future slides.The central bank’s approach to inflation has become increasingly nuanced. “When we talk about headline inflation…we also look closely at its components,” Malhotra said, noting that the CPI, expected to be around 5.1% this year, is “slightly above our target” but driven by sector-specific and supply shocks. He implied that policy would respond to these underlying drivers rather than the headline number alone.