Reserve Bank of India (RBI) Governor Shaktikanta Das has expressed optimism about the Indian economy’s potential for sustained 8 per cent growth, while emphasising the critical importance of maintaining a vigilant approach to monetary policy.
Speaking at the Annual General Meeting of the Bombay Chamber of Commerce on Tuesday, Das defended the Monetary Policy Committee’s (MPC) decision to maintain the 4 per cent inflation target.
He stressed the necessity of avoiding policy errors that could jeopardize economic growth.
The MPC recently kept the policy interest rate unchanged at 6.5 per cent for the eighth consecutive time, citing inflationary concerns.
Das likened the battle against inflation to a chess game, warning that a single misstep could derail progress and prove costly to correct.
“We must navigate the path of inflation with unwavering focus and commitment,” Das stated.
“Any distraction at this stage will impact growth,” he added.
Despite these challenges, Das reassured attendees that the Indian economy is not experiencing a slowdown.
He pointed to clear evidence of private sector capital expenditure picking up, particularly in industries such as cement and steel. The RBI governor emphasized the importance of multi-sectoral growth to drive the economy forward.
India’s economy expanded by 8.2 per cent in the fiscal year 2024, with the RBI projecting a growth rate of 7.2 per cent for the current financial year.
Addressing the current account balance, Das indicated that a moderate level of current account deficit (CAD) is desirable.
India recorded a current account surplus of USD 5.7 billion in the March quarter—the first surplus in ten quarters. This compares to a CAD of USD 1.3 billion in the same period last year and USD 8.7 billion in the quarter ending December 2023.
As India stands at the threshold of a major structural shift, the RBI’s careful management of monetary policy will be crucial in balancing growth ambitions with inflationary pressures.
