Indian Economy Aims for Sustained 8% Growth: RBI Governor

RBI Governor Shaktikanta Das has projected that the Indian economy is on the verge of achieving a sustainable 8% growth rate. He emphasized the importance of cautious monetary policy to avoid disruptions in this progress. Speaking at the Annual General Meeting of the Bombay Chamber of Commerce, Das defended the Monetary Policy Committee’s (MPC) decision to maintain the 4% inflation target and the policy interest rate at 6.5% for the eighth consecutive time, attributing this stance to inflation concerns.

Das likened the battle against inflation to a game of chess, where a single wrong move could derail progress, making recovery costly. He stressed the need for unwavering focus and commitment to reduce inflation, warning that any distraction at this stage could negatively impact growth. This cautious approach is crucial to navigate inflation effectively and maintain the trajectory towards sustained economic growth.

Highlighting the current economic landscape, Das assured that the Indian economy is not slowing down. He pointed out clear evidence of increasing private sector capital expenditure, particularly in sectors like cement and steel, indicating robust economic activity. Das emphasized the need for multi-sectoral growth to drive the economy forward.

In FY24, the Indian economy expanded by 8.2%, and the RBI expects a 7.2% GDP growth in the current financial year. Das also mentioned the desirability of maintaining a moderate current account deficit (CAD). In the March quarter, India recorded a current account surplus of $5.7 billion or 0.6% of GDP, marking the first surplus in ten quarters. This contrasts with a CAD of $1.3 billion or 0.2% of GDP in the same period last year and $8.7 billion or 1% of GDP in the December 2023 quarter.

Overall, the Indian economy is poised for significant growth, with the RBI’s cautious monetary policy playing a critical role in ensuring stability and sustained progress.