"The mandate given to the RBI on maintaining price stability, financial stability and economic growth is not only important from a macroeconomic perspective, but also for the objective of inclusive growth. Persistently high inflation adversely impacts the economy's allocative eficiency and impedes growth. It also contributes to a worsening of income distribution by depreciating the real income of the poor.
"In the backdrop of very high domestic inflation as compared to G20 countries, we adopted a flexible inflation targeting (FIT) framework in 2016 under which primacy has been accorded to the objective of price stability, while simultaneously focusing on growth when inflation is under control.
"Similarly, high growth with financial stability augurs well for inclusive growth. High growth can bring inclusiveness in the process of wealth creation and its spread effect. I need not elaborate, but higher growth also improves tax-GDP ratio which enhances the resource availability with the government to undertake social and infrastructure expenditure. Again, a sound financial system with healthy banks and NBFCs can play an important role in meeting the credit requirements of the bottom of the pyramid. Therefore, we have been focusing on strengthening regulation and supervision to develop a robust framework of financial stability where the banks and the NBFCs are able to fulfil the expectations of the society," he said in his remarks at the Third Suresh Tendulkar Memorial Lecture, hosted by the central bank.
Singapore's Senior Minister Tharman Shanmugaratnam delivered the address.
( With inputs from IANS )