Reserve Bank of India Governor Shaktikanta Das on Wednesday flagged concerns about the ebullient financial markets, stating they may possibly “be running ahead of themselves” amid “somewhat reassuring” global economic data, even as he projected that India’s GDP would grow 7% in 2024-25, with inflation averaging 4.5%.
“Recent information on global macroeconomic front has been somewhat reassuring with inflation gradually descending closer to the target even as growth has held up better than expected in almost every country. The odds of a soft landing have increased and this has enthused the financial markets. Financial conditions have eased, and markets have scaled new highs, raising concerns that they might be running ahead of themselves,” Mr. Das said.
The Governor, who was speaking at a session hosted by the Confederation of Indian Industry at the World Economic Forum in Davos, stressed that certain hard facts had to be kept in mind at this particular juncture. “Global growth is slowing down, geopolitical situation continues to be fragile with new flash points and fear of supply disruptions, geo-economic fragmentation remains unabated undermining global trade and the daunting climate-related challenges which are still holding their ground,” he elaborated.
Turning to the outlook on inflation and growth for the next financial year, Mr. Das said the central bank’s research teams were undertaking a comprehensive assessment for its February monetary policy.
“At this stage, our expectation is that the CPI inflation will average around 4.5% in FY 2024-25. As regards growth, my sense is that the GDP growth in India will touch 7% in FY 2024-25. I am saying this on the basis of strong momentum of economic activity seen in India. Consequently, growth would be 7% and above for four consecutive years starting from FY 2021-22,” he asserted.
The Indian economy, Mr. Das averred, was now “poised for a long haul of higher growth” though there were challenges that had to be dealt with effectively. “With a confluence of factors in its favour, the confidence on India’s prospects is at an all-time high. We have to make this happen in reality,” he concluded.
