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Optimism prevails: RBI Governor Shaktikanta Das on India’s economic outlook
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Optimism prevails: RBI Governor Shaktikanta Das on India’s economic outlook

Reserve Bank of India (RBI) Governor Shaktikanta Das offered a cautiously optimistic view of the Indian economy amid mixed signals on demand during the festival season. He stressed that the positives currently outweigh the negatives, emphasizing that the economy is on a stable growth trajectory, as detailed in a CNBC TV18 report.

In a recent interview with CNBC TV18 in Washington DC, Das acknowledged some slowdown in specific sectors, but asserted that the agricultural sector is booming this year, largely thanks to favorable monsoon conditions. He expressed confidence in the upcoming rabi crop and noted a recovery in rural demand, signaling a positive change for the economy.

Das pointed out that several key economic indicators are showing strong growth, reinforcing the idea that the economy is doing well. However, he also stressed the importance of being aware of external risks, including geopolitical tensions, geoeconomic fragmentation and severe weather events that could affect external demand. He said: “Overall, India’s economic growth has historically been supported by domestic demand and investment, both of which remain robust. »

RBI growth projections

Looking ahead, the RBI forecasts the Indian economy to grow at 7.2% in FY25, with quarterly growth rates expected at 7% for Q2, 7.4% for Q2. third quarter and 7.4% for the fourth quarter. Das noted a favorable balance between growth and inflation, which enabled the RBI to adopt a neutral policy at its recent monetary meeting. This flexibility will allow the RBI to closely monitor incoming data and adjust its policies if necessary.

Das noted that inflation appears to be moderating, and further reductions are expected as the year progresses. He warned, however, that risks remained to the inflation outlook, stressing the need for careful consideration before making premature policy changes.

On interest rates, Das said any potential reduction would depend on upcoming data and inflation trends. He mentioned that household inflation expectations have gradually declined over the past two years, indicating a change in sentiment.

Views on the banking sector

On the stability of the banking sector, Das dismissed concerns over systemic risks, noting that the banking and non-banking financial sectors remain robust. He, however, acknowledged problems in the microfinance sector, where the RBI found some non-banking financial companies (NBFCs) charging excessively high interest rates, prompting regulatory action.

The RBI recently banned four NBFCs from issuing loans due to exorbitant practices, underscoring its commitment to consumer protection.

Finally, Das mentioned the ongoing discussions on liquidity coverage ratio (LCR) guidelines in light of the growing prevalence of digital banking services. He said the RBI is considering tightening LCR norms to mitigate risks associated with rapid withdrawals, reflecting the changing banking landscape in the digital age. Feedback from the banking sector will be taken into account when developing these measures.

Hanshika Ujlayan

Hanshika Ujlayan

Journalist, writing for the WION Business desk. Bringing you relevant economic information with a touch of creativity and simplicity. Find me on Instagram under the name Zihvee, tr

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