Fuelling growth, taming inflation to top Malhotra's agenda at RBI

Sanjay Malhotra moves to head the country's central bank – the Reserve Bank of India (RBI) – at a time when the retail inflation is ruling above the comfort zone and the economic growth has slowed down.

- ABHIJIT LELE & SUBRATA PANDA

So, the first and foremost task will be to rein in inflation, measured by consumer price Index (CPI), and align it with the target of 4 per cent, and take steps to support economic growth.

Gaura Sengupta, economist at IDFC First Bank, said: "Challenge is basically the near-term growth as the outlook has turned a bit adverse; you have downside risk to growth and upside risk to inflation." Earlier, the RBI had the comfort that growth was on the stronger side, so they could remain focused on inflation. Now, going forward, the central bank will have to also start focusing on growth, she added.

Headline CPI (Consumer Price Index) inflation surged above the upper tolerance level to 6.2 per cent in October from 5.5 per cent in September and sub-4.0 per cent prints in July-August 2024, propelled by a sharp pickup in food inflation.

RBI's Monetary Policy Committee (MPC) in its December review revised CPI inflation projection to 4.8 per cent from an earlier estimate of 4.5 per cent (made in October) for the current financial year (FY25).