Shaktikanta Das, Governor, Reserve Bank of India noted in a speech that Indian economy rebounded from the severe contraction imposed by the COVID-19 pandemic and averaged real GDP growth of above 8 per cent during 2021-24. For 2024-25, the Reserve Bank of India (RBI) projects real GDP growth at 7.2 per cent, with risks evenly balanced around this forecast. This growth outlook reflects the underlying strength of India's macro-fundamentals, with domestic drivers - private consumption and investment - playing a major role. Moreover, the growth trajectory is supported by an environment of macroeconomic and financial stability.
India's inflation has moderated from its peak of 7.8 per cent in April 2022 into the tolerance band of +/- 2 per cent around the target of 4 per cent, but we still have a distance to cover and cannot afford to look the other way. The Reserve Bank's projections indicate that inflation is likely to ease further from 5.4 per cent in 2023-24 to 4.5 per cent in 2024-25 and 4.1 per cent in 2025-26. Meanwhile, fiscal consolidation is underway and public debt levels are on a declining trajectory over the medium-term. Corporate performance has improved strongly, enabling deleveraging and strong growth in profitability. Balance sheets of banks and non-banking financial intermediaries, regulated by the Reserve Bank of India, have also strengthened. He noted that our stress tests reveal that these financial intermediaries will be able to maintain regulatory capital and liquidity requirements even under severe stress scenarios.
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