India’s economic growth remains robust, supported by strong macroeconomic fundamentals and domestic drivers such as private consumption and investment, RBI Governor Shaktikanta Das stated on Friday.
Speaking at the Future of Finance Forum 2024 in Singapore, Das highlighted that India's economic rebound from the COVID-19 pandemic has been impressive, with an average real GDP growth of over 8% from 2021 to 2024.
For the fiscal year 2024-25, the Reserve Bank of India (RBI) projects real GDP growth at 7.2%, with risks evenly balanced around this forecast. Das noted that the country's growth trajectory benefits from a stable macroeconomic and financial environment.
Inflation, which peaked at 7.8% in April 2022, has since moderated to within the Reserve Bank's tolerance band of +/- 2% around a 4% target.
Retail inflation based on the Consumer Price Index (CPI) stood at 3.65% in August, slightly above July’s five-year low of 3.6%.
The RBI's projections suggest further easing, with inflation expected to decrease to 4.5% in 2024-25 and 4.1% in 2025-26.
Das also mentioned that fiscal consolidation is progressing, with public debt levels on a declining trajectory. Corporate performance has improved significantly, leading to better profitability and reduced debt levels.
Additionally, the balance sheets of banks and non-banking financial intermediaries are strengthening, with stress tests indicating their ability to maintain regulatory capital and liquidity even under severe stress scenarios.
On the global front, Das emphasised India's commitment to international cooperation and global progress. India's G20 Presidency in 2023 reflects its vision of a unified global future, focusing on strengthening Multilateral Development Banks (MDBs), achieving financial inclusion through digital infrastructure, and addressing debt issues in lower and middle-income countries.
Addressing global financial stability risks, Das observed recent resilience in global financial markets, with strong earnings supporting stocks and low volatility overall.
However, there has been a notable increase in prices of riskier assets and a rise in corporate defaults. He also highlighted that the strengthening US dollar is influenced by market expectations of higher interest rates in the United States.
Das stressed the importance of reforming the international monetary and financial system to ensure global stability and growth. Reforms should address current imbalances, enhance the inclusion of emerging economies in global financial governance, and strengthen the global financial safety net, he concluded.
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