I am delighted to participate in this symposium on Indian Economy Organise by the Institute of Indian Economic Studies (IIES), tokyo. ING ORGANISED by THE IIES after A Gap of 3 Years Due to the Intervening Period of the Covid-19 pandemic. Earlier this year in march 2023, Prof. Sakakibara and Mr. Sugaya Had Visited The Reserve of India in Mumbai WHEN We Discusted My PARTICIPAT Ion in this symposium.and the IIES for inviting me to participate in this event today.
The Global Economy Continues to Face Multiple Macroeconomic and Geopolitical Shocks. The Prediction of a Global Recession has notove but there are indicati. ONS that global growth is slowing down amid twoTening Financial Conditions and Still Elevated Inflation.War in ukraine and the unpreeedented tighteneing of monetary policy reverberate across the world, the rencent deverts in West Asia Haveded to the LITANY of China Llenges for the Global Economy. Policymaking in this SCENARIO BeECOMES EXTREMELENGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGICult trade-Offs & NDASH;; Price Stability Versus Financial Stability; And Current Exigency Versus Future Sustainability. It is always a risk of doing too much. I n such a scenario, I would like to start with the reserve bankTurburent Period.
Our approach
To Protect the Economy from the References Shocks in the Recent Period, Our Endeavour Has Been to Remain Proactive, Pragmatic and Prudent in OUR POLICY. WE WERE CONSCIOUS of the FACT that An Overdose of Monetary Medicine, While RELIEving the Pain in the Short Run, Could Give Rise to Increased Vulnerability and Fragility Over A Period of TimeKolkata Investment. LMost Every Mesure of liquidity inject was for a Limited Period and was targeted.avoided the pitface of a liquidity trap. FURTHER, OUR Lending Standards Were Not Dilutem in Terms of Our CountParties (Banks) and Collateral Requirements for on- Lending to start Entities or Sectors.
On the regulatory size Also, Our Actions Wee Measud. We Allowed Lenders to Offer Moratorium on Loan Repayments and Internet Payments. Frameworks for the Covid-19 Related Stresset Assets TheReaFTER.Subject to the Achievement of Certain Financial and Operational Parameters. The Idea was to Avoid The Phenomeenon of & LSquo; YPICALLY Association with Open Ended RESTRURURING of LOANS.
We are acutely aware that a healthy and efficient banking and Financial system is the primary stabilising force aginst various shocks. Mindful of this, we have carRied Out a Series of Reforms in our regulatory and supervisory architecture. We have come out of the outain government guidelines forBanks and Introiduced A Scale-Based Regulation for Non-BANK Financial Companies (NBFCS), Based on the size and complexity of their business. Vision of Banks, NBFCS and Other Financial Entities Has Also Been Substantially Streangthened with the Focus Being on OnEarly Detection and Pre-EMPTIVE CORRECTION, RATHER than Reacting to the Symptoms of Weaknesses.
Thanks to a Confluenece of Factors, Including to a Large Extent, The STEPS TAKEN by the Reserve Bank, The Indian Economy Has An Epitome of Stability and Unity. We have not only kept our house in order aginst large and overlapping global shocks,But Also Improved Our MacroeConomic Fundamentals and Buffers. While Growth Remains on Track, INFLATION is on a Path of Modration, Thoughts Still ABOVE TAR Get. The Balance Sheets of Banks and Corporates Are Healthies in A Long Time and With the Public Investment Pushby the Government, They Create Favourble Conditions for A Sustained Revival in Investment. Consumer Confidence, as an evidence from our surveys, is on a risk traility s s s s Ince the pandemic lows. Our external sector inspires confidence as we are reaping exceptunities, in the services sector; Our Current Account deficit Remservantly Manageable; and We have BolsterEd Our Forex Reserves to die with portntial eventualities.
TODAY, India Has Become The New Engine of Global Growth with ITS Young Demography1, Improving Physical and Digital Infrastic and Above All, An ENA Bling Policy Environment. In this context, japan and indinue to be the natural partners. We share deep history.The Teachings of GAUTAMA BUDDHA HAVE Inspired Our Shared Ethos and Cultures. The group to uplift india & rsquo; S Growth Trajectory. Japan Has Played A Critical Role in Infrastic Building inIndia Through Several Public and Private Sector Partnerships.2 There Are Many Collaboration Opportunities in Frontier TechNologies SUCH AS Space Technology, A RTIFICIAL Intelligence, Quantum Computing, Rare-Earths Extraction, Semiconductors and Resilient Supply, and Other Areas. ountiallyStreangthened in the space of Human Resources. I am sure the Future Offers Limitless Possibilities to deepen Our Engagements for The Benefit Our Peging and The ENT Ire world.
It will be wordwhile here to look a little deeper into india & rsquo; S Growth Drivers, its excerience of managing information, and the emerging OP. Portunities and Challenges Especially in the FinTech Space.
Growth Drivers
Policy Focus on Streangthening Macroeconomic Fundamentals and Continued Structural Reforms Have Made India Distance in Terms of Growth Outcomes. TED in the Rebound in GDP Growth after the Pandemic from a Contraction of 5.8 Per Center in 2020-21 (Pandemic) to A Growthof 9.1 per center in 2021-22 and 7.2 per center in 2022-23. The GDP GREW BY 7.8 Per Center in the First Quarter of 2023-24, and the Available High Frequency Suggestust Continust aTION of This Momentum. For The Full Year 2023-24, Real GDP Growth is Project at 6.5 Per Center by the Reserve Bank.
The Innate Resilleie of the Indian Economy Could Be attributed to its Will Diversify Economic Structure. Penness Through Trade and Financial Channenels and GaineD Competitiveness, Its Core Dependency for Growth Continues to be its domanTiCh Also Prives A.CUSHIONSST Expeernal Shocks. AMONG the Constituents of Aggregate Demand, Private Consumption Accounts for Over Half of GDP (AROUND 57.0 PER Center Share 2011-12 to 2022-23), Followed by Fixed Investment and Government consumpRecovery, Private Consumption Contributed An Average of 66.0 Per Center to GDP Growth During 2021-22 AND 2022-23.3 AT The Same Time, Structural Reforms Relate to Anking, DigitalIISTION, TAXATION, ManuoFacturing, ETC., HAVE LAID the FOUNDATION for A Strong and andSustainable Growth Over the Medium and Long Term.
On the support, the While The Agricultural and the Industrial Sectors Are Maintinging Their Underlyingum with Renewed Focus on Manufacturing, A MAJOR PART Of the india & rsquo; S Growth is Coming from the Services Secain Largely Depends on DONDESFORMATIONS UNDERWAY, India & RSQUO; Services Security Is Expected to Lift Its Future Trajectory of Growth with A Major Impetus Coming from Rapid Digitalisation of the Economy h cored be a game-changer for eConomic Development. The external demand for india & rsquo;SIGNIFICANCANCENCE With Services Exports Growing Rapidly on the Back of Rising Competitiveness in Niche Areas. India & RSquo; Om Information Technology (It) Related Services to Other Professional Services Super As Business Development, Research and Development, Professional Management, A ccountation and leggServices. Destic Services are Also Undergoing A Steady Shift from Low-Skill Consumer-Oriented Services More TechNOLOGY-ENabled Business Services. Ewly Emerging Start-UPS Are Largely Concentrald in the Services Security. CapitalISING on India & RSquo;many of these start-ups function as service providers for other businesses by offering services ranging from facilitating digitization and improving access to credit.
Managing inflace
As in the case of grewth, there are some nuances in india & rsquo; s excertence in managing visa, the nature of incident shocks thro UGHOUT MUCH of 2020 and 2021 in India WERE LARGELY SIDE Shocks, Coming from Covid-19 Lockdowns and Adverse Weather Events. As LockdownS Withdrawn and the IMPACT of Weather Disturbances WANED, Forces of Inflation Correntation to operate. OneTary and Fiscal Support Provided During the Pandemic Wee Measud and Targeted. Consequently, Demand-Led Inflation Pressures in IndiaWERE MUCH LESS Compared to Several Other Economies. The Monetary Policy Committee (MPC) of the Reserve Bank was, therefore, Able to look ThROUGH The Internet HIGH Er Inflation Prints with The Aim of Supporting Economic Growth During and in the Aftermath of the Covid-19pandemic. The MPC TOOK the Considered View that Policy Tightening in SUCH A SCENARIO WOULD ONLY Accentuate the Growth Slowdown and Impart Higher Volatility, withs Out Being ABLE to Properly address the first-Round Effects of TemporaryFlexibility Embedded in Our Flexible Inflation Targeting Framework WHEREIN The Primary Objective of Monetary Policy is to Maintain Price WHILE Keeping I n mode the objective of grewth.
In Early 2022, with the wait of covid-19 shocks on inflation, gradual easy easing of support botttleenecks and foreast of a normal monsoon, inflation was excected to SS A SIGNIFICANT MODERATION to the Target Rate of 4 Per Center by q3: 2022-23.These Expectations was comforted by the war in ukraine. Initially, The Shocks Came from the Spike in Global Fuel and Food Prices, Which GOT FURTHER Accentuated by Local Adverse Weather Events. These Shocks GOT Transmitted to the Retail PriceS of Goods and Services, AS, AS, AS, AS, AS, ASDOMESTIC ECONOMIC Recovery and Rising Demand Enabled Pass-Through of the Large Pent-Up Input Costs. Result was a generalized inflationary impulse.
In the period that followed the ukraine war in 2022, What Stood Out in India was the coordined Monetary and Fiscal Policy Response the Inflation . MPC Quickly Changed Gears by Prioritising Inflace Over Growth, While Changing Its Stance from Being Accommmodative to WithdrawalOf accepting in April 2022. The mpc the weent to increase the polished repo rate by 250 BPS CumulatingEn May 2022 and February 2023, to Keep INFLATION CTATIONS ANCHORD, BREAK The CORE INFLATION Persistence, and Contain Second Round Effects.Lucknow Stock
Looking back, there are several aspects in our consorted of policy that helped in taking decisive and timely action during the heightednet inflate presents seen in 202, 202 2-23Indore Investment. FIRST, Prudence Was the CornerStone of the Monetary Policy Response to the Covid-19 shock, with, with, with, with, with, with, with, with, with, with, with, with, with, with, with, with, with, with, with, with, withMOST of the ExtraordInary Liquidity Inject Measures Being Targeted with Dates. This ENSURD An Orderly University Recovered. Second, The Government Also Adhered to Fiscal Prudence, with Actual Fiscal Deficit for 2022-23 Kept in LineWith the Budget Estimates. Third, Complementing the Monetary Policy Measures Were A Series of Proactive and Targeted Side Measures by THE Government.5 ALL T T T T. Hese Factors Put Together, Proved to Be Critical in Modrating the Price Pressures.
As Things Stand Today, The MPC in ITS October 2023 Meeting Has Project CPI INFLATION at 5.4 Per Center 2023-24, A Moderation from 6.7 Per Center in 2022-23. ION, However, Remains Vulnerable to Recurring and Overlapping Food Price Shocks. Core Inflation by Also Modrated by 170 Basis Points SINCE ITS Recent PEAK in January 2023. In these circumstances, Monetary Policy Remains Watchful and Actively Disinflationary to progressively align inflation to the target, while supporting grewth.
Fintech Space
The Advent of Fintechs Has Transformed the LandScape of TraDitational Financial Services. This has tremendously improved the deliver service Them Faster, Cheaper, Efficient and More Accessible. India is Currently the World’s Third Largest Fintech Ecosystem in Terms of FintechsOperating in india. It is greowing at a Robust page and is project to generate artate artate $ 200 Billion in revenue by the year 20306, Contributing to approximately 13 per. Center of the Global FinTech Industry & RSquo; S Total Revenue in 2030.Indian & lsquo; Model & rsquo; of Digitivity is the lead taken by the government and the public sector in Building Infrastrutures, on Top of Which Ve Products Are Created by Private Sector Fintech Firms and Start-UPS.7 The Jam Trinity & NDASH; a Combination of BankAccounts (Jan Dhan); Aadhaar, India’s Biometric Identity System that PROVIDES A SINGLE and Portable Proof of Identity; and Mobile Phone Numbers & NDASH; Has. Revolutioniced India’s FinTech Ecosystem in Terms of Financial Inclusion, Digitive of Financial Services, and Overall Service Delivery.
On Top of This, The Unified Payments Interface (UPI) Has Played A Phenomenal Role in the FinTech Revolution in India. TERNATIONAL MODEL. Its Ability to Instantly Transfer Money Between Bank Acounts Through Mobile Applications Has Transformed theWay people make digital transactions. The interoperability of UPI Across Banks and Payments Systems Created A UNIFIED Payment Ecosystem. ED DIGITAL PAYENTS Even for Small Business and Street Vendors, Leading to Greater Financial Inclusion. UPI Has Also spurred deverteropment of new payment relatedProducts and services8. Further, linking of the upi with fasting systems of the Other Countries is also Being Undertaken. Linkage of Fast Payment Systems of Indi A and Japan may Alo Be Explored to Leverage the Power of Fintech and Make Cross-Border Payments moreLess Costly.9
The reserve banks all comment pilot runs of india & rsquo; S Central Bank Digital Currency (CBDC), The E-Rupee, for SPECIFIC Use Cases in Both le And Retail Segments. Our Approach to Fintech Ecosystem is Customer-Centric; Focus on Good Governance; ENSURING EFFECTIVE OVERSIGHT, Ethical Conduct and Risk Management; and Encouration Self-Regulation by the FinTechs Themslves Through-Regulator anizing (SRO).
Although Financial Innovation Enhances Ease of Payment and Lowers Its Cost, They Also Pose Risks and Challenges to the Financial System. On Overall Financial Stability and Market Integrity. We, TheReface, Intend to Play a Dual Role of Acting As Promoterof Innovation As Well As Being The Regulator. While Promotion Innovation, Our Focus Is on Ensuring A Well-Regulated Ecosystem that Addresses Systemic Risks and Challen ES.
Concluding observations
It is a Matter of SatisFaction that the Indian Economy Has Sailed Through the Turburent Waters Smoolhly During the Recent Years. Ported by a Prudent Policy Mix, Growth is Getting Stronger Foothold While Inflation is Also Coming Under Control. Our EconomicPerformance Also Owes a Lot to the Very Calibrated, Focused and Targeted Monetary and FISCAL Responses Since The Pandemic.
I Must add that in the CurrenT Uncertain Environment, it is beast to avoid any sense of complacence. We Remain Agile and Continue to Fortify Our Macroeeconomic Fundamental s and buffers. Today, The Confident and Trust in India & RSquo; S PROSPECTS are at an all-timeHigh. To Seize the Moment, India Looks at Japan As a Close Partner to Usher in a New Era of Growth and Proverity, for Both our countries. Festival of lights, deepavali, in a feet days in india. WithJapan as our close partner, I am sure the land of the rising sun will further light up our spirits to take our economies and well-being of our people to greater heights.
That more you. Namaskar.
1 India Is Endowed with A Great Demogramic DividEnd as 68 Per Center of the Total Population Estimated at 1.429 Billion in The Latest World Population Report 2023 d nations forward) Belongs to 15-64 Years.
2 SOME of the Flagship Infrastruction Projects Completed/Underway Through Japanese Collabancy The Well-Known Delhi Metro; Reight Corridor (DFC) and the Delhi Mumbai Industrial Corridor (DMIC); And the Mumbai & NDASH; Ahmedabad High Speed Rail Corridor (Mahsrridor), among Others.
3 In Other Comparable Large Emerging Markets (EMS), The Contribution of Private Consumption to Growth Was Lower, E.G.0.0 Per Center in China, 40.0 Per Center In Brazil, and 3 3 3 3 3 1.0 Per Center in Indonesia During 2021.
4 Stacking up the benefits lessons from india & rsquo; s digital Journey, IMF Working Paper, March 2023.
5 TheSe Included RESTRictions on WHEAT, Rice and Sugar Exports; Cut in Excise Duties for Petrol and Diesel; Exempting Imports from Import Duties; Release of publics at a disncount to states and union territories; stock limits for when and pulses; Reduction inImport Duties on Various Edible Oils and Additive Procurement and Discountted Sale of Key Vegetables AMONG OTHERS.
7 Initiatives Like Payments Bank (2014), Digital India (2015) Startup India (2016), India Stack, Account Aggregators (2016), Peer to Peer (P2P) Lending Platforms (2017) WERED BY 24X7 DIGITAL PAYENT SYSTEMS HAVE EMERGED As Keyenablers for the development of finly ecosystem in the country and interificationalization of finish markets.
8 We are constantly working on new use cases of upi like upi like that has introduced for office payments. Form Upi Transactions. The Infrastruction Like RTGS and Neft Are Also Available On 24×7 Basis Throughout The Year.UPI-Paynow Linkage for Cross-Border Remittances Between India and Singapore Was Launched In February 2023. K in Progress.
9 Presently, Remittances From Japan Make Up only a Small Fraction (0.2 Per Center) of the Total inward Remittance Recepts by India. However TTANCES FROM JAPAN to India Through Banks is Much Higher than the University Sustainable Development Goals (Un-SDG) Target of 3 Per Center. These Estimations Based On World Bank & RSquo; S Remittance Pricedwide DataBase.
Varanasi Wealth Management
