Reserve Bank of India Governor Shaktikanta Das said on Wednesday he remained optimistic about India’s growth prospects even after GDP growth slowed in the quarter ended June.
“Despite slowing growth, the data indicates that the underlying growth drivers of the Indian economy are gaining momentum,” Das said at the #FIBAC 2024 ‘Banking for Viksit Bharat’ event.
India’s GDP growth rate in the first quarter of this fiscal year was 6.7 percent against the Reserve Bank of India’s forecast of 7.1 percent.
The Reserve Bank of India had projected India’s GDP growth rate at 7.2 percent for the current fiscal year. Das said the International Monetary Fund and the World Bank have also raised their growth forecast for India to 7.00 percent.
“I think the projections from all international institutions, not just central banks, are converging,” Das said.
Das said recent data allows him to confidently say that India’s economic growth is stable. He made this clear in the context of the debate over whether the Reserve Bank of India’s 7.2% growth forecast will actually materialize.
Das said it was clear that India was on a sustainable growth path. “As I said earlier, the two main drivers of growth — consumption and investment demand — are growing in tandem,” he said.
Spending by the central and state governments is likely to accelerate in line with their respective budget estimates, he said, adding that strong balance sheets of banks and corporates create favourable conditions to further support capital investment.
“Taking all these factors into account, I would say the central bank’s projection of 7.2 per cent GDP growth for the current fiscal year is not out of line,” Das said.
Das reiterated that the Indian economy is on the brink of a transformation in terms of its medium to long-term growth prospects.
Moreover, the fact that growth is on an upward trend despite modest global growth indicates that structural factors play a major role in India’s macroeconomic outcomes.
