South Asian economies such as India must give top priority to control inflation as the risks to growth and investment could rise if price pressures persist at high levels, Reserve Bank of India (RBI) governor Shaktikanta Das said on Friday.

Speaking at an event organised by the International Monetary Fund (IMF) in Delhi, Das said measures to check inflation need to be mindful of the rising risks to growth amid deteriorating prospects for global growth and trade activities.

He said multiple external shocks — Covid, Ukraine war and the monetary policy tightening by the West — have exerted sustained price pressures on the South Asian economies. During the first three quarters of 2022, food price inflation in South Asia averaged more than 20 per cent.

Prioritising price stability should, therefore, be the optimal policy choice in the present context. “While the recent softening of commodity prices and supply chain bottlenecks should help in lowering inflation going ahead, risks to growth and investment outlook may rise if inflation persists at a high level,” he said.

For successful disinflation, credible monetary policy actions accompanied by targeted supply side interventions, fiscal, trade policy and administrative measures have become the key instruments, he said.

The region should look at reducing external debt vulnerabilities, focus on raising productivity, strengthen energy security, co-operate on a greener economy and increase tourism.

“The surge in external debt in recent years and associated vulnerabilities have undermined macroeconomic stability in several countries,” he said, pointing to the importance of multilateral agencies in assisting the region.