Blitz Bureau
NEW DELHI: India can achieve sustainable economic growth of up to 8 pc over the medium term, according to the Reserve Bank of India Governor Shaktikanta Das.
His comments to a media publication come shortly after data showed India’s gross domestic product slowed to 6.7 pc in the second quarter, down from 8.2 pc when compared to the same period last year. The figures have ratcheted up pressure on the central bank to launch its own ratecutting cycle sooner rather than later. He expects a growth rate over the next few years of 7.5 pc for India, “with upside possibilities.”
Das said it was difficult to say what healthy growth looks like for the world’s most populous country, but growth of 7.5 pc to 8 pc “can be sustainable” over the medium term. In an August bulletin by the RBI, the governor highlighted an expected 7.2 pc real GDP rate (adjusted for inflation) for 2024 to 2025, with the same figure for the first quarter of the 2025 to 2026 fiscal year, with risks on either side being “evenly balanced.”
India has previously been described by the International Monetary Fund as “the world’s fastest-growing major economy,” while Goldman Sachs says India is poised to become the world’s second-largest economy by 2075 — overtaking Japan, Germany and the U.S. to become second only to China. However, India’s growth rate has moderated in recent quarters and the IMF warned in July that economic expansion is likely to slow to 6.5 pc in 2025.
It comes as major central banks have started to ease monetary policy in recent months, including the European Central Bank, the Bank of England and the Swiss National Bank. The U.S. Federal Reserve is widely expected to join the rate-cutting club later this week, putting further pressure on India to begin loosening policy.
“This seems to be a rate-cut season,” Das said. “But on a serious note, you see our monetary policy will be governed primarily, I would like to stress primarily, by our domestic macroeconomic conditions, by our domestic inflation [and] growth dynamics and the outlook,” he added.
