The Reserve Bank of India (RBI) Governor Shaktikanta Das, on June 25, said he is confident that India’s growth will touch 7.2 percent in the current financial year.
“We are confident about 7.2 percent growth in the current financial year. Of course in any projection, in any forecast, there would be always risks to the upside and downside.,” Das stated.
Das was speaking at the Bombay Chamber of Commerce and Industry.
The central bank Governor further added that the downside risks are weather-related events, geopolitical conflicts, fragmentation in global trades, fragmentation in capital flows, there are other challenges like heightened financial sector volatility.
"At the same time, there are also upside risks, what for real today is that global growth is improving, but at a slower pace," Das noted.
In June monetary policy, the central bank projected real gross domestic product for the financial year 2024-25 to 7.2 percent, from 7 percent estimated previously.
The governor said the GDP growth in the first quarter is likely to be at 7.3 percent, 7.2 percent in Q2, 7.3 percent in Q3 and 7.2 percent in the last quarter, Das said during the monetary policy committee’s (MPC's) press briefing on June 7.
If the growth projection stands true for the the current year, it will be the 4th straight year of growth above 7 percent, Das said.
At address today, Das also said that rural consumption which was lagging behind for a long time has picked up. FMCG sales volumes have increased in the rural sector.
"The external demand is also picking up, all international agencies such as IMF, WTO, or OCED, all global agencies expect global trade volumes will be higher this year than last year," he added.
Going ahead, RBI governor said that what India needs in the future is a growth driven by multiple sectors.
"India’s growth story has been and will be multi sectoral growth and our approach to growth in India has to be multi sectoral approach," Das said.
On the inflation front, he said at 4 percent inflation, our economy will be far better placed, our financial system will be far better placed our growth drivers will be able to sustain themselves.
High inflation make economy an uncompetitive, unfavorable destination for both domestic as well for foreign investment, and it has several other downside, he added.
In May, India’s headline retail inflation eased to the lowest in a year at 4.75 percent in May 2024, from 4.83 percent in April. However, the Consumer Price Food Index or CPFI remained almost flat at 8.69 percent versus 8.7 percent a month ago.
In its latest policy review, the RBI maintained its FY25 inflation projection 4.5 percent but added that food prices could continue to be sticky.
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