Governor, Reserve Bank of India
RBI Monetary Policy LIVE: RBI Governor Shaktikanta Das Presents Monetary Policy Statement
RBI Monetary Policy Meeting LIVE: RBI Governor Shaktikanta Das Presents Monetary Policy Statement
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About Shaktikanta Das
Shaktikanta Das, Principal Secretary to Prime Minister Narendra Modi and former Governor of the Reserve Bank of India, delivered several addresses in April 2026 focused on India’s economic resilience and reform agenda. Speaking at the CII Annual Business Summit 2026 and the All India Management Association’s National Leadership Conclave, Das described India’s navigation of recent global crises as akin to a "chakravyuh," where the challenge lies not in entering a crisis but in exiting it without creating new imbalances. He attributed India’s average annual GDP growth of 7.8% between 2021-22 and 2025-26 to targeted fiscal and monetary stimulus that was gradually withdrawn, structural reforms such as the goods and services tax and the insolvency and bankruptcy code, and a policy of strategic self-reliance (Atmanirbharta). Das also highlighted government initiatives including a ₹7,280 crore rare earth permanent magnet manufacturing scheme and a national critical mineral mission, and stated that inflation control benefits the poor by increasing real spending power. Das rejected the narrative that the Reserve Bank’s monetary policy had caused a growth slowdown, citing 7.1% GDP growth in 2024-25 as evidence. He emphasized that India’s growth is anchored in macroeconomic stability, contained inflation, fiscal consolidation, and a resilient financial system, and said there is "no reform complacency" in the government’s pursuit of its Viksit Bharat 2047 vision. At the AIMA conclave, he received a public service excellence award and remarked that resilience maximization is replacing cost minimization as a global priority.
Transcript (27 segments)
✨ AI-enhanced transcript with speaker attribution
S
Shaktikanta Das0:00
Good afternoon. Our mandate is to maintain price stability while supporting growth. Price stability is crucial for purchasing power, business stability, and all segments of the economy. India has grown over 8% in the last three years. I present the monetary policy statement.
As we stand at the threshold of 2025, central banks continue to face colossal and complex shocks from geopolitical conflicts, geoeconomic fragmentation, financial market volatility, and uncertainties. The last mile of disinflation is prolonged and arduous for both advanced and emerging economies. India, despite recent aberrations, continues on a sustained and balanced path of progress.
The Monetary Policy Committee met on 4th, 5th, and 6th December. By a majority of 4 to 2, we decided to keep the policy repo rate unchanged at 6.5%. The SDF rate remains at 6.25% and the MSF and bank rate at 6.75%. The MPC unanimously decided to continue with the neutral stance, unambiguously focused on durable alignment of inflation with the target while supporting growth.
The MPC noted a slowdown in growth momentum, leading to a downward revision in the growth forecast. Inflation surged above the 6% upper tolerance band in October due to a sharp uptake in food inflation. Food inflation pressures are likely to linger in Q3 and ease from Q4. High inflation reduces disposable income and dents private consumption. The MPC remains committed to restoring the inflation-growth balance.
Turning to domestic growth, Q2 real GDP growth was 5.4%, much lower than anticipated due to deceleration in industrial growth. The slowdown bottomed out in Q2, with recovery aided by festive demand and rural pickup. High-frequency indicators show improvement. Real GDP growth for 2024-25 is now projected at 6.6%, with Q3 at 6.8% and Q4 at 7.2%. Risks are evenly balanced. On inflation, CPI for 2024-25 is projected at 4.8%, with Q3 at 5.7% and Q4 at 4.5%. Going into next year, Q1 at 4.6% and Q2 at 4%. Risks are evenly balanced.
Near-term inflation and growth outcomes have turned adverse. The medium-term prognosis suggests further alignment with the target. Persistent high inflation adversely affects consumption and investment. Price stability is essential for sustained growth. A growth slowdown beyond a point may need policy support. We must draw on the flexibility of the neutral stance to wait for incoming data. Prudence and practicality demand careful monitoring. A status quo in this MPC meeting is appropriate and essential.
System liquidity remained in surplus during October and November despite higher currency circulation. To ease potential liquidity stress, we have decided to reduce the Cash Reserve Ratio (CRR) to 4% of Net Demand and Time Liabilities in two equal tranches of 25 basis points each, effective December 14 and December 28. This will inject about ₹1.16 lakh crore into the banking system and is consistent with the neutral stance. The rupee depreciated by 1.3% largely due to a stronger US dollar and FPI outflows, but its depreciation and volatility were less than peers, reflecting India's strong fundamentals.
The financial parameters of banks and NBFCs are strong. The gap between credit and deposit growth has narrowed. The health of the financial sector is at one of its best in a long time. The Reserve Bank's supervision is vigilant and proactive, resolving issues non-disruptively. Business restrictions are imposed only as a last resort. We have advised banks to reduce unclaimed deposits and facilitate seamless DBT flows to beneficiaries. On the external sector, merchandise exports expanded at a 28-month high in October, and services exports posted double-digit growth. The current account deficit is expected to remain sustainable. To attract more capital flows, we have increased interest rate ceilings on FCNR(B) deposits: for 1-3 years maturity to overnight ARR plus 400 bps, and for 3-5 years to plus 500 bps, effective till March 31, 2025.
Additional measures include: linking the FX Retail Platform with the BBPS to enhance user experience and transparency; introducing the Secured Overnight Rupee Rate (SORR) as a new benchmark; launching 'Connect to Regulate' for wider stakeholder consultation; introducing podcasts as a communication tool; increasing the limit for collateral-free agricultural loans from ₹1.6 lakh to ₹2 lakh per borrower; permitting Small Finance Banks to extend pre-sanction credit lines via UPI; setting up a committee for a framework on responsible and ethical AI (FREE-AI); and developing the Mule Hunter.ai model to combat digital fraud.
Let me conclude. The world is characterized by intricate complexities and uncertainties. As a central bank, our job is to be an anchor of stability and confidence. Since October, inflation has been on the upside while growth has moderated. The MPC has adopted a prudent and cautious approach. Prudence, practicality, and timing of decisions are critical. As Mahatma Gandhi said, 'There is nothing that cannot be attained by patience and equanimity.' The Indian economy has navigated this turbulent period successfully and emerged stronger. I recall quoting Netaji Subhas Chandra Bose: 'Never lose your faith in the destiny of India.' Thank you. Namaskar.
Every two months I present the monetary policy statement on behalf of the MPC and the Reserve Bank. This practice of a detailed statement started during COVID. Monetary policy affects every segment of society. Our effort is to follow the flexible inflation targeting framework. The mandate is to maintain price stability while supporting growth. With these opening remarks, I present the monetary policy statement.
[This section repeats the earlier statement content from 00:00:00 onward. The key decisions and outlook remain unchanged as already described above.]
For deposits of 1 year to less than 3 years maturity, the ceiling has been increased to overnight ARR plus 400 basis points, up from 200 basis points. Similarly, for deposits of 3 to 5 years, the ceiling is now overnight ARR plus 500 basis points versus 300 earlier. This relaxation is available until March 31, 2025.
I shall now announce additional measures. First, the FX Retail Platform, launched in 2019, will be linked with the BHIM-UPI connect platform of NPCI, enabling transactions through mobile apps of banks and non-bank payment system providers. Second, a new benchmark called the Secured Overnight Rupee Rate (SORR) will be introduced to develop the interest rate derivative market. Third, a 'Connect to Regulate' initiative will be launched under RBI@90 for open regulation, where stakeholders can share ideas on specific topics. Fourth, podcasts will be added as a communication medium. Fifth, the limit for collateral-free agricultural loans is raised from ₹1.6 lakh to ₹2 lakh per borrower to enhance credit for small and marginal farmers.
Next, credit lines on UPI, launched in September 2023 through scheduled commercial banks, will now be extended to small finance banks. On artificial intelligence, a committee of experts will be set up to recommend a framework for responsible and ethical enablement of AI in the financial sector (FREE-AI). Finally, an innovative AI/ML-based model called 'Mule Hunter' has been developed by the RBI Innovation Hub in Bengaluru to help banks deal with mule accounts and reduce digital fraud.
Let me conclude. The world is characterized by complexities and uncertainties. As a central bank, our job is to be an anchor of stability. Since the October policy, inflation has been on the upside with a moderation in growth. The MPC has adopted a prudent approach to wait for better visibility. At such a critical juncture, prudence, practicality, and timing are critical. We will continue to implement timely and calibrated measures. As Mahatma Gandhi said, 'There is nothing that cannot be attained by patience and equanimity.' We have traversed one of the most difficult periods, and the Indian economy has emerged stronger. I recall my statement of February 8, 2023, quoting Netaji Subhas Chandra Bose: 'Never lose your faith in the destiny of India.' Thank you, namaskar.
Every two months I present the monetary policy statement on behalf of the MPC and the RBI. We started this detailed statement during the COVID period. Monetary policy affects every segment of the economy — from vegetable vendors to big corporates, middle class, farmers, industry, and business. That is why you are listening to the Governor's statement. Our effort is to follow the flexible inflation targeting framework as per the RBI Act. The mandate is to maintain price stability while keeping in mind the objective of growth. Price stability is important for purchasing power, businesses, exporters, and importers. At the same time, growth is very important. India has been growing at more than 8% in the last three years. With these opening remarks, I present today's monetary policy statement.
As we stand at the threshold of 2025, let me reflect on 2024. Central banks were put to the test to stabilize economies against complex shocks. Geopolitical conflicts, geoeconomic fragmentation, and financial market volatility continue to test global resilience. The last mile of disinflation is proving prolonged and arduous. India, notwithstanding recent aberrations in growth and inflation, continues on a sustained and balanced path. The MPC met on December 4, 5, and 6 and decided by a majority of 4:2 to keep the policy repo rate unchanged at 6.5%. Consequently, the SDF rate remains at 6.25%, and the MSF rate and bank rate at 6.75%. The MPC also decided unanimously to continue with the neutral stance and remain focused on durable alignment of inflation with the target while supporting growth.
I shall now set out the rationale. The MPC noted the recent slowdown in growth, leading to a downward revision in the growth forecast for the current year. Inflation surged above the upper tolerance band of 6% in October, driven by food inflation. Food pressures are likely to linger in Q3 and ease from Q4. High inflation reduces disposable income and dents private consumption. Adverse weather, geopolitical uncertainties, and financial market volatility pose upside risks to inflation. The MPC believes only durable price stability can secure strong foundations for high growth. The MPC is committed to restoring the inflation-growth balance. Hence, it decided to keep the repo rate unchanged at 6.5% and continue with the neutral stance.
Allow me to provide an assessment of growth and inflation. The global economy has shown unusual resilience in 2024. Inflation is gradually moving towards targets, prompting central banks to pivot. Global trade remains resilient but confined within geographic blocks. Since the last MPC, financial markets have been edgy with rising US dollar and bond yields, causing capital outflows from emerging markets. Going forward, rising protectionism may undermine global growth and push inflation higher.
Now turning to domestic growth. Real GDP growth in Q2 at 5.4% was much lower than anticipated, mainly due to deceleration in industrial growth from 7.4% to 2.1%, caused by subdued manufacturing, contraction in mining, and lower electricity demand. However, weaknesses were not broad-based but limited to petroleum products, iron and steel, and cement. High-frequency indicators suggest the slowdown bottomed out in Q2 and has since recovered, aided by festive demand and rural pickup. Agricultural growth is supported by healthy kharif crop and reservoir levels. PMI manufacturing at 56.5 and PMI services at 58.4 indicate continued expansion. Taking all factors into account, real GDP growth for 2024-25 is projected at 6.6%, with Q3 at 6.8% and Q4 at 7.2%. For Q1 of 2025-26, it is projected at 6.9% and Q2 at 7.3%. Risks are evenly balanced.
Now on inflation. Inflation increased sharply in September and October 2024 led by an unanticipated rise in food prices. Core inflation, though subdued, also picked up in October. Fuel remained in deflation for the 14th consecutive month. In the near term, lingering food price pressures will keep headline inflation elevated in Q3. A good rabi season will be critical for softening. Record kharif production should bring relief to rice and pulses prices. Vegetable prices are expected to see seasonal winter correction. On the upside, domestic edible oil prices following import duty hikes and global price rises need monitoring. CPI inflation for 2024-25 is projected at 4.8%, with Q3 at 5.7% and Q4 at 4.5%. For 2025-26, Q1 at 4.6% and Q2 at 4%. Risks are evenly balanced.
What do these conditions mean for monetary policy? Near-term inflation and growth outcomes have turned somewhat adverse since October. The medium-term prognosis suggests further alignment with target, while growth is expected to pick up. Persistent high inflation reduces purchasing power and adversely affects consumption and investment. Therefore, price stability is essential for sustained growth. On the other hand, if growth slowdown lingers, policy support may be needed. The RBI's anti-inflationary stance has been crucial in bringing significant disinflation. As food price shocks wane, headline inflation is expected to ease. At present, it is necessary to draw on the flexibility of the neutral stance to wait and monitor incoming data. The gains achieved in disinflation need to be preserved. At this critical juncture, prudence and practicality demand we remain careful. A status quo in monetary policy in this meeting has thus become appropriate and essential.
Let me now turn to liquidity and financial market conditions. System liquidity remained in surplus during October and November on account of higher government spending, despite a significant increase in currency in circulation. The Reserve Bank mainly conducted variable rate reverse repo operations to absorb surplus, while fine-tuning variable rate repo operations were conducted intermittently to alleviate tightness due to GST outflows. The two-way operations ensured close alignment of the interbank overnight rate with the policy repo rate. Transmission to the credit market has been satisfactory. To ease potential liquidity stress in coming months, it has been decided to reduce the CRR of all banks to 4% of NDTL in two equal tranches of 25 basis points each, effective from the fortnights beginning December 14 and December 28. This will release primary liquidity of about ₹1.16 lakh crore.
During April to November 2024, the Indian rupee depreciated by 1.3%, largely due to a strengthening US dollar and selling pressure by FPIs. However, both depreciation and volatility were less than in EM peers, reflecting India's strong fundamentals. The RBI's exchange rate policy is market-determined, aimed at maintaining orderliness and stability without compromising market efficiency. Forex reserves are deployed judiciously to mitigate undue volatility, anchor expectations, and preserve financial stability. Our interventions focus on smoothing excessive volatility, not targeting any specific level. The flexible exchange rate regime is an important element of our macro-financial stability approach.
Let me now focus on financial stability. The financial parameters of banks and NBFCs continue to be strong. The gap between credit and deposit growth has narrowed. The health of the financial sector is perhaps at one of its best in a long time. The RBI's supervision remains vigilant and proactive. Incipient signs of stress are monitored, and proactive action is initiated. Continuous engagement with regulated entities over several months often resolves issues without imposing restrictions. Only in extreme cases where corrective action is not visible does the RBI resort to business restrictions as a last resort. To address unclaimed deposits and frozen accounts due to pending KYC, banks have been advised to take urgent steps. Beneficiaries of government DBT schemes must have uninterrupted credit and utilization of amounts, especially for vulnerable segments.
Now turning to the external sector. India's merchandise exports expanded at a 28-month high pace in October, while imports increased for the seventh consecutive month. Services exports sustained double-digit growth in Q2 and October 2024. Robust services exports together with strong remittances are expected to keep the CAD within sustainable levels. Gross FDI to India increased at a robust pace in H1, though net FDI moderated due to higher repatriations. FPI inflows to India stand at US$ 9.3 billion so far in the current year, supported by debt segment inflows. ECBs and NRI deposits witnessed higher net inflows. India's external sector remains resilient. To attract more capital inflows, the interest rate ceilings on FCNR(B) deposits have been increased as announced earlier.