India's development potential is at least 7.5%, according to Reserve Bank of India Governor Shaktikanta Das, speaking at an international gathering in Singapore on Friday. This figure is significantly higher than the Reserve Bank of India's estimate of 7.2% growth for the current fiscal year, FY25.
During his speech at the Bretton Woods Committee's annual Future of Finance Forum, Das stated, "I believe India's potential growth today is around seven and a half percent or higher." The Reserve Bank of India said that the event was held in Singapore in partnership with Swiss bank UBS.
Global Financial Stability; Risks and Opportunities - Keynote Address by Shri @DasShaktikanta Governor, RBI - September 13, 2024 - at the Future of Finance Forum 2024 organized by BWC in Singapore.https://t.co/MfsdkemcvS — Reserve Bank of India (@RBI) September 13, 2024.
"This year, we expect at the end of the year to record 7.2 per cent," according to Das. India's growth rate in the April-June quarter was 6.7% lower than in the previous year. This was ascribed to a reduction in government spending owing to the Lok Sabha elections. The rate fell short of the Reserve Bank of India's prediction of 7.1%.
'Risks surrounding growth expectations are balanced'
Das stated that the risks to growth predictions are balanced and supported by robust macroeconomic fundamentals, with private consumption and investment serving as significant 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 said.
For the current fiscal year, the Reserve Bank of India expects inflation to fall to 4.5 percent. It also projected that the average inflation rate will fall to 4.1% in the coming fiscal year (FY26), assuming normal monsoon conditions and no external or policy shocks.
Das observed that, while service exports have grown, merchandise export growth has fallen short of expectations due to lower external demand. He also cited progress in fiscal consolidation, a reduction in public debt, and improved business performance as elements supporting a balanced growth outlook.
