More work needed for long-term benefit of demonetisation: Urjit Patel

Talking about the government’s demonetisation drive, Patel said that it has addressed its objective and there have been “several collateral” benefits as well. “In terms of greater accountability, better public finance, more transparency are by definition areas that take time to fully play out. We have also had financial re-intermediation, in terms of greater financial savings going into deposits, mutual funds and insurance. So, there have been a fair number of benefits,” said the RBI governor.

The demonetisation drive has achieved its objectives and has also led to several collateral benefits said RBI Governor Urjit Patel in an interview to CNBC-TV18 news channel.

The Reserve Bank of India (RBI) Governor Urjit Patel. (Reuters)

“In terms of greater accountability, better public finance, more transparency are by definition areas that take time to fully play out. We have also had financial re-intermediation, in terms of greater financial savings going into deposits, mutual funds and insurance. So, there have been a fair number of benefits,” said the RBI governor.

But Urjit Patel added: “I think in all these supportive policies and more work is needed so that these benefits are not only tangible but are long-lasting and durable.”

In the interview, Urjit Patel also said that RBI needs to ensure that the hard earned gains with regard to macro-economic stability are maintained and able to withstand global financial volatility.

Patel in a rare interview that was broadcast on Friday said India was at a “good place” in terms of financial stability and the central bank will manage any sharp volatility in the markets arising out of global developments including concerns over U.S. President Donald Trump’s protectionist policies.

“We have had a budget where the fiscal deficit has been reduced, we have a central bank which has a mandate for flexible inflation targeting, we have reserves which are over $360 billion and we have a current account deficit which continues to be modest,” Patel said in the interview.