Allaying concerns over growing inflation, Reserve Bank of India (RBI) Governor Shaktikanta Das has said that the Indian economy’s growth remains resilient, adding that inflation is expected to moderate despite periodic humps.
Consumer Price Index (CPI) inflation in October 2024 rose to a fourteen-month high of 6.21% led by food inflation. The Reserve Bank of India (RBI) has an inflation target of 4% (with a tolerance of 2% on either side) and has been working towards keeping inflation within the range. This is the first time in over a year that CPI inflation has crossed 6%.
Talking about India’s impressive growth post pandemic, Das said, “The Indian economy rebounded from the severe contraction imposed by the COVID-19 pandemic and averaged a real GDP growth of above 8 per cent during the last three financial years. For the current year (2024-25), the Reserve Bank of India has projected real GDP growth of 7.2 per cent, with risks evenly balanced around this forecast. Improving domestic demand, lower input costs and a supportive policy environment, are spurring manufacturing activity. The services sector has been displaying strong growth. The growth outlook reflects the underlying strength of India’s macro-fundamentals, with domestic drivers – private consumption and investment – playing a major role.”
This resilient growth, Das stated, has enabled the RBI to focus on inflation to ensure that it descends to the 4% target. Referring to the RBI’s monetary policies being instrumental in containing inflation, he said, “Overall, while average growth during 2021-24 remained buoyant at above 8.0 per cent, the receding of headline inflation in 2023-24 and 2024-25 (up to September) to within the tolerance band bears testimony to the success of the Reserve Bank’s policies.”
Despite the strong fundamentals, the country is not resting on its laurels, the governor assures. “The Indian economy presents a picture of stability and strength. The balance between inflation and growth is well-poised. The external sector demonstrates the strength of the economy. Forex reserves are scaling new peaks. Fiscal consolidation is underway. The financial sector remains sound and resilient. Global investor optimism on India’s prospects is perhaps at its highest ever. We are, however, not complacent, especially amidst the rapidly evolving global conditions.”
At South Indian Bank, we are committed to partnering with RBI and the nation at large in achieving its robust growth ambitions, while contributing to keep inflation in check.
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