Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said he was certain about the country’s economy growing close to 6.5 percent during financial year 2023-24 or FY24, even as some global agencies, including the International Monetary Fund (IMF) and World Bank, have projected lower growth rates.
Speaking at a book launch event of 'Made in India' authored by Amitabh Kant, G20 sherpa, the RBI governor said that the central bank stands by its FY24 GDP growth forecast of 6.5 percent. Das said that the central bank has shared its rationale with international agencies. “Although international agencies like the IMF have given lower projections, we have shared our thoughts with the IMF,” Das stated.
"The country's GDP is expected to grow 7 percent in FY23. For the current year (FY24), we have given a projection of 6.5 percent, and we are quite optimistic and fairly confident that the actual growth will be close to that,” the RBI governor stated. Das further said that if the growth projection materialises, 15 percent of the world's growth in the current fiscal will come from India, "which is not a mean achievement".
The central bank's rate-setting panel had in April projected the country's real GDP to grow at 6.5 percent in FY24 from 6.4 percent forecast earlier. Real GDP in Q1 is forecast to grow at 7.8 percent, Q2 at 6.2 percent, Q3 at 6.1 percent and Q4 at 5.9 percent.
Days after the central bank's forecast of a 6.5 percent GDP growth rate, the IMF and the World Bank slashed their projections to 5.9 percent and 6.3 percent, respectively, citing global slowdown in consumption and challenging external conditions.
On India's inflation
Das also said that the latest inflation data of 4.7 percent gave the central bank the confidence to say that “the monetary policy is on the right track”. “The inflation numbers give me and my colleagues at RBI a reasonable amount of confidence that monetary policy is on the right track,” the governor stated.
Further, he said that the high-frequency indicators supported the central bank's growth forecast. Das said that the growth was not just limited to the base effect but there was a strong month-on-month momentum. Das believes that RBI's analysis of the indicators show that urban demand continues to be strong and rural demand has started picking up.
India's annual retail inflation cooled to an 18-month low of 4.70 percent in April, below the RBI's upper tolerance level of 6 percent, as food prices softened, government data showed on Friday. The central bank targets a range of 2 percent-6 percent.
The consumer food price index (CFPI), which accounts for nearly half of the overall consumer price basket, moderated to 3.84 percent, down from 4.79 percent in March 2023.
