- The outgoing deputy governor of RBI has credited flexible inflation targeting,low crude prices and efficient food supply management for successful taming of inflation in recent years.
- The RBI has shifted to a flexible inflation targeting with a headline target of 4 percent(+/- 2 percent) when the Monetary Policy Committee (MPC) was instituted in 2016.
- He also said that RBI’s efforts in keeping inflation in check has helped savings as the households were moving away from financial assets to physical assets such as housing and gold.
- Further,he said that the two preconditions of macroeconomic stability which are stable growth and low inflation for financialisation of savings and capital market development are now in place in India.
- However,improving pension and insurance coverage for households should be a priority as it not only leads to social welfare outcomes but also to a stronger and more stable investor base for capital markets.
- He further said with the bankruptcy law,the legal framework for financial regulation is also moving closer to being comprehensive and effective in the context of non- financial corporate borrowers.
- However,the lack of a bankruptcy resolution framework for non-bank financial entities remains a crucial gap that deserves prompt attention of the authorities.
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