Fundamental drivers of economy gaining momentum, despite slowdown in GDP growth: RBI governor

Shaktikanta Das, RBI Governor

The fundamental growth drivers for the economy are far from slowing down and, instead, they are gaining momentum, according to Reserve Bank of India (RBI) Governor Shaktikanta Das.

“Notwithstanding the moderation in growth from the previous quarter and below our projection for the first quarter, the data shows that the fundamental growth drivers of the economy are actually gaining momentum, they are not slowing," Das said at FIBAC 2024 on September 5. "This gives us the confidence to say that the India growth story remains intact."

Das's comments came after the country's economic growth rate decelerated to a five-quarter low of 6.7 percent in the first quarter of the fiscal from 7.8 percent in the preceding March quarter, as government consumption contracted owing to election-related activities, according to data released by the government on August 30.

The growth was subdued compared with the 8.2 percent jump seen in Q1FY24, but it was in line with the consensus estimate of a Moneycontrol survey of 13 economists last week, which had predicted 6.8 percent growth with forecasts ranging from 6 percent to 7.5 percent. It was also lower than the RBI forecast of 7.2 percent for the first quarter.

Das said that the Indian economy was at a critical juncture. Massive changes are taking place in various economic sectors and market and the country is geared with orbital shifts, he said.

To realise this transition from an emerging economy to an advanced economy by 2047, India would need a multi-pronged and multi sectoral approach. "Our focus should be on employing all engines of growth from both supply and demand side. The supply side focus must encompass the agriculture industry and services," Das said.

On the inflation front, the governor said that with the monsoon progressing well and healthy kharif sowing raising prospects of better harvest, there is greater optimism that food inflation outlook would become more favourable during the course of the year.

"However, we need to remain watchful of how the forces impacting inflation play out. The balance between growth and inflation is well poised,” Das said.