RBI Confident in 7.2% Growth Forecast for FY 2024-25

Central Bank Stresses Price Stability as Key to Growth

The Reserve Bank of India (RBI) maintains its 7.2% growth projection for FY 2024-25, despite a recent slowdown. RBI Governor Shaktikanta Das reaffirmed this at FICCI's FIBAC 2024 conference on September 5. He emphasized that the recent economic dip does not warrant revising the forecast, pointing out that key growth drivers are still strong.

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Inflation Control Remains the Focus

Das underscored that inflation control is central to achieving sustainable growth, noting that the RBI is nearing the "last mile of disinflation," especially in food prices. The RBI has kept interest rates unchanged for over 18 months and is in no rush to cut rates. "The best contribution monetary policy can make is to maintain price stability," said Das, signaling the central bank's caution.

Growth Drivers Show Strength

Das highlighted private consumption, investment recovery, rural spending, and credit growth as positive signs for the economy. He noted that these factors are gaining momentum, reinforcing the RBI's confidence in its growth outlook. "The Indian growth story remains intact," he affirmed, dismissing concerns over recent slowdowns.

Interest Rate Outlook and MPC Continuity

Economists expect rate cuts by the end of 2024, potentially in line with actions by the US Federal Reserve. However, Das emphasized that the RBI will act cautiously, only considering rate cuts when inflation is firmly under control. He also confirmed that the new members of the Monetary Policy Committee (MPC) will be appointed in time for the October 9 meeting, ensuring policy continuity.

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Conclusion: Optimism for India's Growth

Despite recent challenges, the RBI remains optimistic about India's economic trajectory. With inflation cooling and growth drivers strengthening, the central bank is confident that the 7.2% growth target is achievable, while maintaining a steady focus on price stability.

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