‘Despite the ripples caused by global tightening, our financial systems do not seem to be under any stress at all’: Sanjeev Sanyal

Mastercard Presents Times Network Living Room Conclave – India Financial Series

Emerging from the clutches of the economic slowdown triggered by the pandemic, and despite the current global headwinds, India remains the fastest growing large economy. The country is home to a growing banking and digital payments sector, which has of late, witnessed a growth in credit offtake. India’s digital banking too has taken off in a big way. Owing to the government’s push to digitisation through various measures such as Unified Payments Interface (UPI), cashless transactions have penetrated fast in both the urban and rural areas. Digitisation has helped in terms of price discovery, discovery of credit worthiness, and of course, widening the reach.
During the economic recovery, the consumer demand has in a way remained buoyant. There has been an upward movement of interest rates, which has been passed on to consumers. While going through a significant recovery, yet dealing with the inflationary pressures, the Reserve Bank of India has been steadily tightening the monetary conditions.

To discuss more on the intricacies of India’s economic situation and the way ahead, Sanjeev Sanyal – Member, Prime Minister’s Economic Advisory Council engaged in a fireside chat with Mihir BhattVice President & Executive Editor, Times Network, in the second episode of Mastercard Presents Times Network Living Room Conclave – India Financial Series.

Sanjeev  Sanyal Member PMs Economic Advisory Council
Sanjeev Sanyal, Member, PM’s Economic Advisory Council
During the conversation, Mr. Sanyal talked about the prevailing interest rate and demand scenario, effects of inflation targeting, the current global economic situation and the role of central bank in containing inflation. He also shed light on the way ahead for India’s digital economy.
Speaking on the macroeconomic indicators, Mr. Sanyal said, “All the growth indicators are consistent. We are getting high numbers from industrial growth, the credit offtake has accelerated, there has been some decent export growth, and of course, the GST numbers have been very strong as have been the direct tax collection figures. All these numbers are consistently suggesting that we are seeing a strong growth recovery, coming out from the COVID period.”

Expressing optimism about India’s banking system and the financial markets, Sanjeev Sanyal said, “Despite the ripples caused by global tightening, our financial systems do not seem to be under any stress at all. The credit system is not under any stress, nor is the financial market which sometimes goes up and at other times comes down, as that is its very nature. What matters is that this happens in an orderly fashion.”

On being asked about the inflationary expectation management, Mr. Sanyal opined, “There are inflationary pressures around the world, and since India is an open economy and dependent on imported commodities, particularly energy, we should consider the inflationary pressures that are being faced. Given the supply side reforms that we undertook during COVID, the domestic dynamics of inflation are not worrying. However, there are limited things that we can do about import related inflation. At the margin, we can cut taxes on fuel, and it has been done in the past. A country dependent on imported fuel will be subjected to the vagaries of international oil prices, till the time we find alternate sources of energy and move out of this issue.”

Sharing his views on the impact and benefits of internationalisation of the Indian rupee (INR), Mr. Sanyal mentioned, “Allowing for international settlements using the INR is an important step in a long journey towards turning the Indian rupee to hard currency. Over time, hopefully, we will keep taking more steps. It will have limited effect in the immediate future because it requires some time for importers and exporters to consider the rupee, or other countries (with whom we have bilateral trade agreements) accepting it. So, there will be a period when the glitches of this new mechanism will get worked out. In the medium term, we will see an expansion and in the long term, we should aspire to have our currency as a hard currency, and perhaps, even be a part of the IMF’s Special Drawing Rights (SDR) basket.”

Sanjeev Sanyal also spoke at length about the financial journey of India, and his outlook on the country’s economy, which is expected to remain the fastest growing large economy this year and in the next year.

Watch Mastercard Presents Times Network Living Room Conclave – India Financial Series every weekend on Times Now, Times Now World, ET NOW, ET NOW Swadesh and Mirror Now at the below timings.

LRC India Financial Summit

Saturday Sunday
TN 5:30PM 4:30PM
TNW 5:30PM 4:30PM
ETN 8:30PM 8:00PM
ETN Swadesh 7:30PM 7:30PM
MRN 5:30PM 1:30PM

(This is a partnered article)