Reserve Bank of India governor Shaktikanta Das achieved a big achievement as he collaborated with the government well during the current economic downturn, said former RBI chief YV Reddy in an exclusive chat with CNBC-TV18.

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"When there is a crisis, you cannot operate without the government," Reddy said, adding that structural changes needed to handle such macro scenarios cannot be done without the government playing ball.

Reddy concurs with global market watchers as he believes that India is in a good position because the rest of the world is in serious trouble in the short term. "India has managed to manage their short-term troubles," he said.

Reddy's comments come against the backdrop of the consistent rate hikes by central banks to combat inflation.

Last month, in its first monetary policy review after the Union Budget 2023, the Reserve Bank of India (RBI) decided to raise the policy repo rate by 25 basis points by a majority and keep a 'strong vigil' on the inflation outlook. This was the sixth time the interest rate has been hiked by the RBI since May last year, taking the total quantum of the hike to 250 basis points.

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The COVID-19 pandemic and subsequent lockdowns, as well as the Russia-Ukraine war and China's zero-COVID policy, resulted in global supply constraints across the globe, which led to central banks, taking a cue from the US Fed, consistently raising their interest rates to combat inflation and a possible global slowdown and recession.

Last week too, the US Federal Reserve raised interest rates by 0.25 percent to 5 percent, the highest level since June 2006.

On another note, Reddy also said that he was happy with the RBI cleaning the banks, "but all cleaning up is because 90 percent of the assets are written off. No other country or bankruptcy process is seeing such a low 5 percent realisation of value."

Watch full interview of Former RBI Governor YV Reddy here.

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(Edited by : Abhishek Jha)

First Published:Mar 27, 2023 1:16 PM IST