Global uncertainties remain the number one challenge in the next 12 to 18 months but the RBI is well positioned to deal with them, Malhotra added.
“Upside risks on crude, energy and fertilisers have certainly reduced, but we’ll have to still wait and watch as to where crude prices ultimately end up,” he said, expressing hope that crude prices will come down next year.
He cautioned that the global environment and the progress of monsoon remains uncertain which the RBI is keeping a close eye on.
“We are in a wait and watch mode because the monsoon has been weak so far but just to clarify we have enough food stocks. The impact on growth is what is to be monitored,” Malhotra said.
He said the RBI will keep an eye on both crude prices and the progress of monsoon to take a view on inflation.
“There is elevated uncertainty so we have to be cautious. There could be risks on both inflation and growth,” Malhotra said.He said the de-escalation in the West Asian conflict is a big positive for the whole world and also for an Indian economy but said that though outlook has improved, risks have not disappeared.
He reiterated that India remains well prepared to deal with both external and domestic challenges.
He expressed confidence that the recent measures by the central bank to attract dollar inflows will yield fruit though he did not give a target of how much the central bank plans to garners.