RBI Governor Shaktikanta Das
The Indian economy is likely to surpass the 7.6 per cent growth estimate of the National Statistical Office (NSO) in the current financial year (FY24), potentially nearing the 8 per cent mark, Reserve Bank of India Governor Shaktikanta Das said on Wednesday.
The NSO in its second estimate pegged economic growth at 7.6 per cent for the current financial year.
“The high-frequency indicators and the momentum of economic activity tell us that the 5.9 per cent growth in Q4 could be surpassed. And when that happens, the growth will be more than 7.6 per cent. There is a good chance of the GDP number for the current year being very close to 8 per cent,” Das said in an interview with a news channel.
Regarding GDP growth for the next financial year (FY25), Das stuck to the estimates provided during the February monetary policy review, which was 7 per cent.
“We are quite optimistic about next year. With a reasonable amount of confidence based on our internal analysis, I can say that 7 per cent (growth) is very much on the table next year,” Das said.
He attributed the robust economic growth to improved rural and strong urban demand, compared to last year. Investment remains strong, supported by the government and increasing private capex. Das said private capex is rebounding, notably in steel, construction, textiles, and chemicals sectors, indicating a broader economic revival.
The Governor also indicated that the savings rate in the country will improve as economic growth strengthens.
Currently, the credit growth in the economy is about 16 to 17 per cent and deposit growth is around 12 to 13 per cent. Meanwhile, the historical growth trends in deposits are around 13 to 14 per cent.
“To some extent, I think there has been some dip in deposits, perhaps because I think now there is a propensity to spend more. I think people’s consumption expenditure is picking up. Eventually, that money comes back into somebody else’s bank account. So, as economic growth takes a greater foothold, I think one can expect the savings rate to improve.”
Regarding inflation and policy stance, the Governor emphasised the RBI’s commitment to achieving a sustainable and enduring 4 per cent inflation rate.
“It cannot be just a one-off number or just one-month number touching 4 per cent, which will give us satisfaction. It has to be sort of sustainably and durably at around 4 per cent and that is something which will give us greater confidence. But the direction is clear, inflation is on a downward trajectory.”
However, the central bank continues to be cautious with its monetary policy stance due to two geopolitical uncertainties resulting in supply chain challenges and weather-related events which affect food prices.
The inflation print for January was 5.1 per cent, 110 basis points (bps) higher than RBI’s target. The RBI’s estimation of Consumer Price Index (CPI) inflation for FY25 is 4.5 per cent.
On the issue of Paytm Payments Bank, which has been asked to stop deposit and credit transactions after March 15, Das clarified that the measure was against a payment bank which is a regulated entity and not against any fintech.
He said that the deadline of March 15 for Paytm Payments Bank will be sufficient and not cause any disruption, since only 15-20 per cent of Paytm app users have linked their account to the payments bank.
“A large part of Paytm payment app users (about 80 to 85 per cent) are linked to other banks, like Paytm bank or entirely different banks. So, about 80 to 85 per cent of the customers who are using the Paytm payment app will not be impacted at all because their app is also linked to another bank account of theirs,” Das said.
“Therefore, their payments can go on in a non-disruptive manner. The challenge is with regard to those 15 or 20 per cent of the users who have linked only with Paytm Payments Bank. Paytm Payments Bank has been advised to shift these customers to other banks,” he said.
First Published: Mar 06 2024 | 8:41 PM IST
