RBI Governor Shaktikanta Das spoke exclusively to NDTV at the World Economic Forum in Davos.
Davos, Switzerland:
The Indian economy is expected to achieve real GDP growth of seven percent next year, Reserve Bank of India Governor Shaktikanta Das told NDTV on the sidelines of the World Economic Forum in Davos on Thursday. He said the economy has weathered prolonged turmoil – including the pandemic and geopolitical tensions in Ukraine and the Middle East – thanks to a stable macroeconomic core.
Mr Das also emphasized that the RBI continues to keep a close eye on inflation, which peaked at 7.8 percent during the early months of the Ukraine crisis. He expects this inflation to continue to moderate as it moves towards 4 percent. .
“India has recovered from recent volatilities and uncertainties, such as the health crisis and geopolitical tensions, and emerged better. (Our) macroeconomic stability is better than most other countries (and) our financial sector is also doing well,” he told NDTV. in an exclusive interview.
“…the seven per cent growth figure, when we said it, seemed optimistic… but look now, the NSO has given a figure of 7.3 per cent (for financial year 2023/24),” Mr Das said, referring to bring forward estimates of the annual GDP figures released by the National Statistics Office (NSO) earlier this month.
These estimates, labeled as 'early projections for 2023/2024', came after the RBI last month raised its growth forecast from 6.5 per cent. According to the NSO, this growth is expected to be driven by the manufacturing sector, which is responsible for an estimated growth of 6.5 percent. 17 percent of GDP and is expected to grow at an annual rate of 6.5 percent in 23/24, compared to just 1.3 percent twelve months earlier.
READ | Advance estimates GDP growth at 7.3% over 2023-2024
For context, the Indian economy grew by 7.2 percent in 2022/2023 and 8.7 percent the year before.
Shifting his focus to the 2024/25 financial year, Mr Das told NDTV that he expected India's growth to be fueled by an overall “very positive” macroeconomic situation and positive momentum from a range of activities.
“I had said earlier that we expect the economy to achieve real GDP growth of seven percent next year… based on the overall macroeconomic situation in the country. For all economic activities, the momentum remains very positive (and) we believe this will happen. extend into the following year and beyond.”
Mr Das said India has seen “long-term growth”, explaining: “Overall demand conditions remain positive… investment activities are picking up, supported by high capital expenditure (capex) by the government, and private sector capex is also increasing . We expect agriculture to do better too.”
On the level of inflation, Das said monetary policy measures (taken by the RBI) and supply-side measures by the government have helped bring down headline inflation rates. At an event in Davos this week, he said inflation was “under control and within the two-six percent range that we have.”
READ | Inflation moderating towards 4% target, says RBI governor
“The RBI is fully committed to bringing inflation down to the four per cent target,” he had said.
Annual retail inflation rose by the fastest pace in four months in December, but core inflation, which excludes volatile food and energy prices, fell to a four-year low of around 3.8 percent in November.
Significantly, the RBI chief also said that the stellar growth of start-ups in areas like fin-tech is making the global economy sit up and take notice of the country, as evidenced by the investments in these areas.
At a systemic level, there is a lot of interest in India, Mr Das said, highlighting questions posed to him by his peers and other global leaders on fintech initiatives such as digital payment systems, including the RBI's digital currency and UPI, or unified states. payment interface, systems.
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