RBI pegs 2024-25 growth at 7%, inflation at 4.5%: RBI Governor at Davos
India’s economic activity has sustained its strong momentum with both urban and rural demand supporting growth. The strong thrust by the government on capital expenditure coupled with signs of pick up in private investment and healthy aggregate demand conditions, are expected to lift the real GDP growth to 7% in the next fiscal year of 2024-25. With this, India would see a 7%+ growth rate for four consecutive years. This was stated by Mr Shaktikanta Das, Governor, RBI at a Luncheon Session organized by Confederation of Indian Industry on the topic ‘High Growth, Low Risk: The India Story’ as a part of the World Economic Forum (WEF) Annual Meeting 2024. He further added that amid a challenging global macroeconomic environment, India presents a picture of growth and stability.
Highlighting the reasons behind India’s emergence as the beacon of growth, Mr Das, stated that the decisive and timely monetary policy actions of the Reserve Bank of India through appropriate policy actions and liquidity measures have helped India to achieve a quick and sustained recovery. These actions have been supplemented by structural reforms in the areas of taxation, banking, ease of doing business, boosting physical & digital infrastructure announced by the government in the last few years, which together have boosted the medium- and long-term growth prospects of Indian economy.
On inflation, RBI Governor highlighted that the sharp moderation seen in core inflation (ex-food & fuel) in the recent months has shown the efficacy of the monetary tightening measures of the RBI and liquidity rebalancing measures. He reiterated that the future monetary policy actions of the Central Bank will steer the economy towards the 4% inflation target on a durable basis given the fact that a stable inflation regime region provides a bedrock to India’s growth ambitions. For the next fiscal year FY25, RBI expects the CPI inflation to average 4.5%, he added.
Commenting on the global headwinds, Mr Das noted that the recent heightened uncertainty has resulted in emerging market (EM) economies being at the receiving end of excessive volatility in US dollar and the bond yields. “In such a situation, the EM economies which have their own domestic challenges cannot be held hostage to international financial cycles. EM economies have to act to safeguard their own interests. Accordingly, the multilateral institutions could do well to take a more nuanced and balanced view of policy perspective of the EM economies”, he added.
On the rising prowess of India’s Fintech sector, RBI Governor said that the Fintech ecosystem in India has tremendously improved, with the adoption rate of Fintech in India rising to 87% which is well above global average of 67%. India’s Fintech market is projected to reach US$150 billion by 2025, a significant leap from US$50 billion in 2021, he added.
Mr R Dinesh, President, CII and Chairman, TVS Supply Chain Solutions Ltd, stated that the Central Bank’s proactive approach in terms of remaining alert and committed to acting early & decisively to prevent any build-up of risks in the financial system have significantly contributed to the resilience of the Indian economy by creating a stable and favorable business environment.
Mr Chandrajit Banerjee, Director General, CII highlighted that India story is about the journey from an incredible India to a credible India, adding that as the rest of the world faces challenges of low growth and high risk, India faces a high growth and a low-risk phenomenon.
17 January 2024
Davos