Shaktikanta Das: Shaktikanta Das, governor of the Reserve Bank of India (RBI), noted that a synchronised tightening of monetary policy globally has gradually increased the possibility of a hard landing, which is a recession to reduce inflation. However, India is in a different position, he added.

Speaking of the soaring inflation pressure around the world, Das noted that the advanced economies with systemically important inflation ended up being enduring rather than passing through.

The RBI Governor went on to say that the third shock was caused by the US Fed’s vigorous tightening of monetary policy and the dollar’s ensuing unceasing appreciation.

Das continued, “Spillovers to EMEs (emerging market economies) and to India were in the form of capital outflows, depreciation pressures on currencies, reserve losses, and imported inflation,” during the annual research conference of the Department of Economic and Policy Research (DEPR) of the RBI yesterday in Hyderabad.

According to Das, the traditional research questions for emerging market economies — such as the evaluation of the sustainability of the external sector, the viability of a range of policy options to maintain sustainability, and an analysis of the efficacy of those options — have resurfaced. This is especially true because the nature and scope of the spillover risk have changed significantly over time.

The RBI governor discussed how the central bank’s research department has addressed some of the most significant policy difficulties in recent years in addition to outlining some of those challenges.

This fiscal year, the central bank expects real GDP to expand by 7%.

The Governor claimed that in the typical academic setting of a university or research centre, it was much simpler to evaluate the influence of the staff’s research by combining statistics on published research output, downloads, citations, and impact factor to assign authors and organisations a score.

He added that while a large portion of policy research conducted by central banks is used internally and not publicised, it is always challenging to quantify its utility and impact. He also praised the DEPR for its good job during these difficult times.

On the other hand, domestic inflation was reduced, averaging 3.9% during the flexible inflation targeting regime (June 2016 to February 2020). According to Das, the research question at the time was what reasons caused the decrease in inflation.