'India's growth potential is above 7.5%': RBI Governor Shaktikanta Das

At a Singapore forum, RBI Governor Shaktikanta Das projected that India has a growth potential of at least 7.5%, slightly above the RBI's official 7.2% forecast for 2024-25

India has a growth potential of at least 7.5 per cent, Reserve Bank of India Governor Shaktikanta Das said on Friday at an international forum in Singapore. This projection is slightly above the Reserve Bank of India’s estimate of 7.2 per cent growth for the current financial year, FY25.

During his address at the Bretton Woods Committee's annual Future of Finance Forum, Das said: “I think India's potential growth today... is about seven-and-a-half-per-cent-plus.” The forum took place in Singapore in collaboration with Swiss bank UBS, the Reserve Bank of India said.

Global Financial Stability; Risks and Opportunities - Keynote Address by Shri @DasShaktikanta Governor, RBI - September 13, 2024 - at the Future of Finance Forum 2024 organised by BWC, Singaporehttps://t.co/MfsdkemcvS

— ReserveBankOfIndia (@RBI) September 13, 2024

"This year, we expect at the end of the year to record 7.2 per cent," Das said. In the April-June quarter, India experienced a slower growth rate of 6.7 per cent year-on-year. This was attributed to decreased government spending due to the Lok Sabha elections. The rate fell short of the Reserve Bank of India’s projection of 7.1 per cent.

 

'Risks around growth forecasts are balanced'

Das said that risks around growth forecasts are balanced, supported by strong macroeconomic fundamentals, with private consumption and investment as key drivers.

“Inflation has moderated from its peak of 7.8 per cent in April 2022 into the tolerance band of around the target of 4 per cent, but we still have a distance to cover and cannot afford to look the other way,” he added.

For the current financial year, the Reserve Bank of India has projected inflation to decrease to 4.5 per cent. It also estimated that in the next financial year (FY26), the average inflation rate will ease to 4.1 per cent, assuming normal monsoon and no external or policy shocks.

Das noted that while services exports have increased, merchandise export growth has fallen short of expectations due to weaker external demand. He also emphasised the progress of fiscal consolidation, a decline in public debt, and improving corporate performance as factors supporting a balanced growth forecast.