The Reserve Bank of India's Governor Shaktikanta Das on Wednesday said India's GDP will reach 6.5 per cent and may likely cross 7 per cent. This is because the economic activity continued in the fourth quarter. Das also added that the agriculture sector and the service sector have done well which has helped in the growth of the economy.
He further added that the inflation for the next inflation print could be lower than 4.7 per cent.
RBI Governor says, "Pausing inflation not in my hand."
The governor while speaking at the CII Annual Session in Delhi also said that pausing interest rates is not in his hand as it is driven by what is happening at the ground level.
"So, it's not a decision which is entirely in my hands, because I am driven by what's happening at the ground level. So, to that extent, you know, I think I will leave it at that," the Governor said.
The Governor further said retail inflation has moderated, but there is no room for complacency.
"Financial markets will remain volatile as uncertainty over the future monetary policy path is keeping market sentiments on the edge," said Das addressing the current market situation.
Global economy is facing headwinds
Explaining the current global scenario he added that according to IMF data a total of 39 low income countries are in debt distress. Das said, "The global economy is facing headwinds from the lingering geopolitical conflict, elevated inflationary pressures from across countries and tighter financial conditions on the back of monetary policy tightening by major central banks across the world."
But giving a positive outlook he talked about the easing of supply chain disruptions that are supporting global growth and easing commodity pricing. Das also spoke about the slowing pace of interest rate hikes and the improving inflation rate across countries.
Banking sector
According to Das, "As central banks raise interest rates rapidly to contend inflation, fault lines emerged in banks and non-bank financial intermediaries. The resilience of the financial sectors has been severely tested in recent times."
These disruptions in financial systems have impacted the outlook in larger economy's and raise concerns regarding the stability of the banking sector. But the RBI governor said that despite the global uncertainty Indian banking sector has remained stable and resilient with a strong capital and liquidity position.
"RBI will remain proactive and prudent, and will do its best to support the economy to maintain financial stability of India," the Governor said.
He also informed the gathering that the RBI is fine-tuning the Central Bank Digital Currency (CBDC) architecture based on the experience so far.
Domestic growth
Talking about growth in the Asia-Pacific and India Das said that the Asia-Pacific region is expected to contribute 70 per cent of global growth in 2023 and India will contribute 15 per cent of global growth, while the economic slowdown is affecting advanced economies. Das further added that capacity utilisation in India is at 75 per cent in the manufacturing sector, but according to a CII survey it might even go higher.
