India’s central bank expects growth rate at 6.5 pct this fiscal year

The rate of inflation in India during the current fiscal year (April 2023-March 2024) is expected to remain above 4 percent, while the country’s economy is likely to grow at 6.5 percent, Governor of the Reserve Bank of India (RBI) Shaktikanta Das said on Thursday.

Announcing the monetary policy in the financial capital Mumbai, the central bank governor said the Indian economy was strongly placed at a time of global uncertainties.

“We can derive satisfaction from the fact that the Indian economy and the financial sector stand out as strong and resilient in a world of unprecedented headwinds and swift cross currents. Unlike the previous three tumultuous years, the uncertainty on the horizon appears comparatively less and the path ahead somewhat clearer,” he said in a statement.

The RBI governor said India’s economic activities remained resilient and surpassed previous projections.

“India’s real gross domestic product (GDP) recorded a growth of 7.2 percent in 2022-23, stronger than the earlier estimate of 7 percent. It has surpassed its pre-pandemic level by 10.1 percent. Taking all factors into consideration, the real GDP growth for the 2023-24 year is projected at 6.5 percent,” he said.

With the inflation remaining under control, the central bank’s Monetary Policy Committee decided to remain the Repo Rate, the rate at which the RBI lends money to banks, at 6.5 percent.

Any change in the Repo Rate affects bank loans and equated monthly installments (EMIs). The RBI raised the Repo Rate by a total of 250 basis points since May 2022 to keep inflation in check, before opting for a pause at the previous meeting in April.

“Fiscal consolidation is also ongoing. The Indian banking system remains stable and resilient, credit growth is robust and domestic financial markets have evolved in an orderly manner,” the RBI governor said.