Mumbai: Reserve Bank of India (RBI) Governor Shaktikanta Das has expressed confidence that the economic growth rate will be 6.5 percent in the current financial year (FY24). He said that we have estimated the growth rate after considering all aspects and we have every hope of achieving it.
He also said that if the US Federal Reserve increases the policy rate further, then it is not expected to affect the exchange rate of the rupee. Also, due to better service exports, the current account deficit will remain within a manageable range.
Expected better growth than IMF and Fitch rating estimates
The RBI has retained the GDP growth forecast of 6.5 percent in the monetary policy review presented this month. However, this is much higher than the 5.9 percent economic growth rate projected by the IMF in April this year. At the same time, rating agency Fitch Ratings has increased India’s GDP growth rate estimate for the current financial year to 6.3 percent in the latest estimate.
RBI’s balanced stance on the GDP growth rate
Das said, “We have taken a balanced approach regarding the GDP growth rate. In any case, you speculate, there are both positive and negative risks. Taking all this together, we have taken a balanced approach and on the basis of this, we estimate that the economic growth will be 6.5 percent in the current financial year and we are very optimistic about it.
Fluctuations in the rupee are very minor
In the last financial year 2022-23, the economic growth rate was 7.2 percent, which is more than expected. When asked about the rupee, Das said, “See since the time of Kovid, the rupee-dollar exchange rate has been very stable. If we take the figures from January till now this year, the fluctuations in the rupee are very minor. In fact, there has been a slight strengthening of the rupee. It is our endeavor that there should not be excessive fluctuations in the dollar-rupee exchange rate.
Rupee stable after rate hike by Federal Reserve
He said, “The Federal Reserve in the US increased the interest rate by 500 basis points (5 percent), and even after that the rupee is quite stable. Therefore, whether it is domestic investors or foreign investors, it is a positive message for their confidence that the Indian Rupee is stable. The central bank is paying attention to its stability. If the US Federal Reserve increases the policy rate further, then it is not expected to affect the exchange rate of the rupee.
Decrease in goods exports but an increase in service exports
Das said, “As far as Current Account Deficit is concerned, it was 2.7 percent till April-December. We are going to release the figures till the end of the year, that too will be within range.” Explaining the reason for this, he said, “Goods exports have definitely come down but service exports have increased a lot. Capital inflow has also increased this year. Although it is for finance. The main reason is the increase in service exports. Along with this, the import bill has also come down. Crude oil was around $ 100 billion a barrel for many months last year, this year there is a shortage. That’s why CAD will remain in the manageable range in the current financial year.
Credit growth is not confined to a few sectors
Regarding the bank loan growth in the current financial year, the Governor said, “This year the loan growth has been very strong. So far, it has increased by 16 percent on an annual basis. There has been growth in many areas. Credit growth in the retail sector is within sustainable limits. According to the information received from the banks, recently there is a lot of demand coming from corporate loans or loans related to projects. That’s why the ‘credit growth’ is happening slowly in all the sectors. It is not limited to some areas.
