Reserve Bank of India (RBI) Governor, Mr. Shaktikanta Das, has projected that India’s growth potential could surpass 7.5%, a figure that is slightly higher than the current estimate of 7.2% for FY25. This projection was shared during his speech at the Bretton Woods Committee's Future of Finance Forum held in Singapore, where Mr. Das outlined a positive economic outlook for India despite some recent challenges.

He acknowledged that India’s growth in the April-June quarter had slowed to 6.7% year-on-year, largely due to a temporary decline in government spending during the Lok Sabha elections. However, India’s strong macroeconomic fundamentals, particularly driven by private consumption and investment, continue to provide solid support for balanced growth forecasts. Mr. Das reaffirmed that these factors, along with a concerted effort to maintain fiscal discipline and improve corporate performance, will drive sustained economic expansion.

The RBI Governor also touched upon inflation trends in his address. Inflation, which had peaked at 7.8% in April 2022, has since moderated and is steadily moving closer to the RBI’s target of 4%. He further forecasted that inflation would decrease to 4.5% in FY25, with a further decline to 4.1% in FY26, provided no significant external economic shocks occur. This decline in inflation reflects the effectiveness of the RBI’s monetary policies aimed at stabilizing prices while fostering economic growth.

Mr. Das highlighted that, while services exports have been on the rise, merchandise exports have faced challenges due to weak external demand. He stressed the importance of maintaining a diversified export strategy to ensure long-term resilience in the face of changing global market conditions. In particular, India's service sector has been a key driver of export growth, compensating for the challenges faced by traditional merchandise exports.

Furthermore, progress in fiscal consolidation was another focal point of Mr. Das’s address. He emphasized that the Indian government has made significant strides in reducing public debt and strengthening the country’s fiscal position. This progress not only boosts investor confidence but also ensures that India has the fiscal space to support future growth initiatives.

As the economy continues to stabilize, corporate performance has shown marked improvements, with better profitability and enhanced capital allocation contributing to the overall positive economic outlook. India’s corporate sector, Mr. Das noted, is becoming increasingly resilient and globally competitive, which bodes well for the country’s long-term economic trajectory.

In terms of external factors, Mr. Das remained optimistic that, despite global economic uncertainties, India is well-positioned to weather external challenges. He emphasized that strong domestic demand, particularly from the private sector, will remain a crucial driver of growth in the coming years. This demand, coupled with ongoing government initiatives to improve infrastructure and enhance the ease of doing business, is expected to attract further investment, both domestic and foreign.

To bolster India’s growth potential, the RBI continues to focus on creating a stable macroeconomic environment. Monetary policies aimed at ensuring price stability while promoting economic growth have been carefully calibrated to address current and future challenges. At the same time, the RBI is working closely with the government to ensure that the banking sector remains robust and able to support the country’s ambitious growth goals.

In his concluding remarks, Mr. Shaktikanta Das stressed that India’s growth story is far from over. With a solid foundation in private consumption, investment, and macroeconomic stability, India is well on its way to achieving higher levels of economic growth. He urged stakeholders in both the public and private sectors to continue working together to ensure that this growth is inclusive and sustainable.

India’s future, as outlined by Mr. Das, is one where private investment, fiscal discipline, and innovation will lead the charge. He expressed confidence that with the right policies and continued focus on economic reform, India will not only meet but exceed its current growth projections.

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