Reserve Bank of India (RBI) Governor Shaktikanta Das indicated that the Indian economy's Gross Domestic Product (GDP) growth for the current fiscal year ending in March could be "very close" to 8%. This assertion follows India's remarkable economic performance, with GDP surging at 8.4%, marking its fastest pace in 18 months during the final quarter of 2023. This growth was predominantly fueled by robust manufacturing and construction activities.
The optimistic outlook prompted the government to revise its growth estimate for the 2024 fiscal year to 7.6% from the earlier projection of 7.3%. Governor Das expressed confidence in surpassing this revised estimate, stating, "Our sense and understanding of the high-frequency indicators and the momentum of economic activity tells us that this 5.9% growth (expected) in Q4 could be exceeded, and when that happens, obviously, the (full year) growth will be more than 7.6%."
Das attributed this buoyancy to multiple factors, including improving rural demand, which has surged compared to the previous year, alongside continued strength in urban demand. He emphasized the resilience of investment activity, citing both government and private sector capex as significant contributors. Private investment, particularly in sectors like steel, construction-related industries, textiles, and chemicals, has notably picked up.
Looking ahead, the RBI projects a growth rate of 7% for the next fiscal year. Governor Das expressed optimism about the upcoming period, asserting that achieving a 7% growth rate was very much within reach. However, he cautioned against complacency, emphasizing the central bank's unwavering commitment to bringing inflation down to its target of 4%. Despite witnessing a clear downward trajectory in prices, Das highlighted persistent uncertainties stemming from geopolitical tensions and weather-related risks.
"Investment activity continues to be strong, driven by government capex and private capex also beginning to pick up particularly in certain key sectors like steel, some sectors related to construction activity, textiles, chemicals. So private investment is also picking up," he said.
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