Reserve Bank of India announces that India can maintain growth of 8% or higher

Mumbai:

An article on “economic conditions” in the March Bulletin released by the Reserve Bank of India on Tuesday said that India can maintain an annual GDP growth of 8% and that favorable macroeconomic configuration may become a springboard for upgrading the country’s growth trajectory.

During 2021-24, gross domestic product (GDP) growth will average over 8%.

The global economy is losing momentum, with growth slowing in some of the most resilient economies and high-frequency indicators, the article written by a team led by RBI Deputy Governor Michael Debabrata Patra said , indicating that it will further stabilize in the coming period.

In India, real GDP growth in the October-December period 2023-24 reached its highest level in six quarters, driven by strong growth momentum, robust indirect taxes and lower subsidies.

High visibility of structural demand and healthier corporate and bank balance sheets are likely to be motivating forces for future growth.

“The world faces dramatic structural and emotional shifts that are either underway or about to occur,” the report said.

The article pointed out that the outlook is shrouded in layers of uncertainty, which is exacerbated by geopolitical and extreme weather risks, as well as divisive forces.

In contrast, it said the Indian economy is experiencing favorable macroeconomic configurations which can serve as a springboard for an upgrade in its growth trajectory.

“The average growth rate during 2021-24 is over 8%; fundamentals suggest this growth can be sustained and even continue to develop,” the authors said.

While businesses are deleveraging and improving debt servicing, the current account deficit is modest, external buffers are resilient and fiscal consolidation is underway for a third consecutive year.

The article stated that the balance sheet of the financial sector is sound and healthy, providing the necessary funds to regulate the productive credit demand for economic recovery.

“Financial markets are pricing in these favorable formations. Capital inflows have resumed strongly as investor interest has returned to India,” it said.

The authors further stated that technology is providing new growth opportunities that can be captured by becoming more competitive and efficient.

They added: “Now is the time to build world-class infrastructure, a strong manufacturing base, a highly qualified workforce and global service industry leadership to turn these tailwinds into opportunities and advantages for decades to come.”

The article further said that aggregate demand in the third quarter of 2023-24 was investment-driven, with some signs of recovery in the private capex cycle. Capacity utilization in several industries has reached a point where new investments are necessary.

“The longest ever four-lane road could be built this financial year, as well as the longest ever speed or access controlled motorway – with the potential to create a world-class road network by 2037,” said.

It also noted that demand prospects for the high-end consumer business are strong and the growth pace is expected to continue into the medium term.

This indicates that per capita income is changing significantly, the report said, adding that opportunities in small towns are driving business growth in the lifestyle sector and companies entering these markets will enjoy the fruits of being first movers.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)