RBI continuing to press ahead for smooth transmission of monetary policy: Urjit Patel

RBI Governor Urjit Patel on Wednesday said that the central bank will continue to press ahead for a more fluid and smooth transmission of monetary policy.

"Low and stable inflation is an essential prerequisite for having a meaningful interest rate structure or regime whereby decisions by savers and investors help to achieve maximal allocative efficiency in an economy whose investment rate has to increase for better growth outcomes, " Patel said during the ongoing Vibrant Gujarat Summit 2017 at Gandhinagar.

"Concomitantly, we have to continue to press ahead for a more fluid, smooth transmission of monetary policy, as also enhance the formulaic linkage between changes in policy rates and other rates, including administered ones, " he said.

He further said, "Since 2013, the central government has successfully embarked on a fiscal consolidation path. Even then, our general government deficit (that is borrowing by the centre and states combined) is, according to IMF data, amongst the highest in the group of G-20 countries."

"In conjunction, the level of our general government debt as a ratio to GDP is cited by some as coming in the way of a credit rating upgrade. We have to take cognisance of these comparisons and facts as we go forward to make progress. Specifically, this will help us to better manage risks for ourselves, and thereby mitigate financial volatility". RBI Governor said.

Now there is need for high level working group to look into legal framework and swift dispute resolution in International Financial Services Centre (IFSC). RBI Governor also makes a case for unified regulator for IFSC.

"A unified financial regulatory framework providing for a single regulator for GIFT City could contribute to better regulation and supervision of the financial entities," Patel said.

"While individual regulators can supervise the entities initially when the size of the business is small, a unified regulator would be necessary to pay undivided attention to the IFSC. Work on the design of such a framework should begin soon so as to be able to implement this in time," he added.