India ready to become the new engine of world growth: #RBIGovernor

Mumbai.(PTI) .The Reserve Bank of India (RBI) on Friday maintained the country's gross domestic product (GDP) growth estimate at 6.5 percent for the current financial year. Central Bank Governor Shaktikanta Das has said that India is ready to become the engine of growth of the world.

While presenting the bi-monthly monetary review of the Reserve Bank, Das said that amidst the slowing pace of the global economy, the domestic economy is showing fighting potential due to strong demand. Quoting Kautilya's great text 'Arthashastra', the RBI Governor said that macroeconomic stability and inclusive growth are the basic elements for the country's progress.

He said, “The kind of policy coordination we have done over the last few years to deal with multiple and unexpected shocks has strengthened macroeconomic and financial stability.” He said that the external sector also remains manageable to a great extent. He said that instead of the pressure of double bookkeeping a decade ago, there is now a situation of the benefit of double bookkeeping in which the accounts of both banks and companies are strong.

He said that the global economy is currently slowing down due to difficult financial conditions, prolonged geopolitical tensions, and increasing geo-economic fragmentation. 

The RBI Governor said, “In contrast to global trends, domestic economic activity reflects buoyancy which comes from strong domestic demand. India is ready to become the new engine of growth of the world.Das said geopolitical pressures, fluctuations in financial markets and fuel prices, and climate-related events pose risks to the growth outlook. Keeping all these aspects in mind, RBI has estimated to achieve a growth rate of 6.5 percent in the current financial year.

RBI said that the growth rate is estimated to be 6.5 percent in the second quarter of the financial year 2023-24, six percent in the third quarter and 5.7 percent in the fourth quarter. Considering the risks equally in these quarters, the growth rate for the entire financial year is estimated at 6.5 percent.

Whereas in the first quarter of the next financial year 2024-25, the actual growth rate maybe 6.6 percent. Earlier, in the review meeting in August, RBI had estimated only 6.5 percent growth for the financial year 2023-24. The RBI Governor said that the Indian economy is growing even in a challenging global environment and is drawing strength from its underlying macroeconomic fundamentals and other supporting points. 

However, Das said rising prices of some food products have bucked the downward trend in inflation in the July-September quarter. RBI has maintained the estimate of retail inflation at 5.4 percent in the current financial year.