RBI Governor Shaktikanta Das spoke exclusively to NDTV at the World Economic Forum in Davos.

Davos, Switzerland:

The Indian economy is expected to touch real GDP growth of seven per cent next year, Reserve Bank of India Governor Shaktikanta Das told NDTV Thursday on the sidelines of the World Economic Forum in Davos. He said the economy had navigated prolonged turmoil – including the pandemic and geopolitical tensions in Ukraine and the Middle East – thanks to a stable macroeconomic core.

Mr Das also stressed the RBI continues to closely monitor inflation that dangerously breached the central bank’s target bands during the initial months of the Ukraine crisis, when it touched 7.8 per cent, and that he expects this to continue moderating as it moves towards four per cent.

“India has recovered from recent volatilities and uncertainties, such as the health crisis and the geopolitical tensions, and emerged better. (Our) macroeconomic stability is better than most other countries (and) our financial sector is also doing well,” he told NDTV in an exclusive interview.

“… the seven per cent growth figure, when we said it, it looked optimistic… but now see, the NSO has given a figure of 7.3 per cent (for FY 2023/24),” Mr Das said, referring to advance estimates of annual GDP figures released by the National Statistics Office, or NSO, earlier this month.

Those estimates, flagged as “early projections for 2023/24 – came after the RBI raised its growth forecast last month from 6.5 per cent. This growth, the NSO said, is expected to be fuelled by the manufacturing sector, which accounts for an estimated 17 per cent of the GDP and is expected to expand 6.5 per cent, year-on-year, in 23/24, compared to just 1.3 per cent 12 months earlier.

READ | Advance Estimates Peg GDP Growth During 2023-24 At 7.3%

For context, the Indian economy grew 7.2 per cent in 2022/23 and 8.7 per cent the year before.

Switching his focus to FY 2024/25, Mr Das told NDTV he expected India’s growth to be fuelled by an overall “very positive” macroeconomic situation and positive momentum from a range of activities.

“I had said earlier that we expect the economy to touch real GDP growth of seven per cent next year… based on the overall macroeconomic situation in the country. For all economic activities the momentum remains very positive (and) we believe this will stretch into the next year and beyond.”

Mr Das said India had entered “long-haul growth”, explaining, “Aggregate demand conditions remain positive… investment activities are picking up, backed by high capital expenditure (capex) by the government, and private sector capex is also picking up. We expect agriculture to do better too.”

On inflation levels, Mr Das said monetary policy actions (taken by the RBI) and supply-side measures taken by the government have seen headline inflation figures coming down. In an event at Davos this week he had said inflation is “under control and within the two-six per cent band we have”.

READ | Inflation Moderating, Moving Towards 4% Target, Says RBI Governor

“The RBI is fully committed to bringing inflation down to the target of four per cent,” he had said.

Annual retail inflation rose the fastest in four months in December but core inflation, which strips out volatile food and energy prices, dropped to a four-year low of around 3.8 per cent in November.

Significantly, the RBI chief also said the stellar growth of start-ups in fields like fin-tech were making the global economy sit up and take notice of the country, as evinced by investment in these areas.

At a systemic level there is a lot of interest in India, Mr Das said, highlighting questions he had been asked by his counterparts and other global leaders about fin-tech initiatives like digital payment systems, including the RBI’s digital currency and UPI, or unified payment interface, systems.

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