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‘No talk of change in policy stance’

RBI governor Shaktikanta Das has made it clear that rates are not going to rise soon and that he would look through price pressures on account of global commodities as long as there was no pick up in demand.
When will RBI start normalising the monetary policy?
It is too premature to talk about normalisation. There is no thinking on normalising the policy stance at the moment. Our inflation projection has gone up from 5% to 5.1%, which is not significant.
Should the government shift some spending from capital expenditure to boost demand?
This question should be for the government. We are only in May, there are still 10 months in the year for the government to start spending. Capital expenditure has been increased by 30% that is also demand-creating. While rural and urban demand has been dented, the second wave has also moderated, and we expect it to be confined to the first quarter. I expect demand to pick up when restrictions are lifted.
Would NPAs rise beyond what was projected in January?
I do not want to pre-empt the financial stability report (FSR), which is due at the end of this month. Having said that many banks have raised capital last year. The capital position of the banking sector and individual banks are at stable levels and whatever projection we had given in our earlier FSR looks quite manageable.
There has been a call for the RBI to print money, expand the balance sheet…
Central banks take a decision (on creating money) based on complex factors relating to financial stability, inflation, exchange rate stability. For now, the RBI has been successful in managing the borrowing requirement of states and the Centre. Last year, government borrowing rates were the lowest in 15 years. This year, we have supported markets with G-sec Acquisition Programme 1 (G-SAP 1.0) and G-SAP 2.0, in addition, we have injected Rs 36,000 crore through our operations in the secondary market.
Why is the RBI focused on 10-year yield at 6%?
We have only talked about an orderly evolution of the yield curve. Our focus is on the entire yield curve across maturities and not just the 10-year. In the G-SAP, we have included bonds across maturities. Markets should draw a conclusion based on our forward guidance, action, and communication.

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