A compelling case for pragmatism
When Chinese President Xi Jinping landed in Macau, the world’s gambling capital, the air was thick with anticipation. Macau,often dubbed the “Las Vegas of the East,” is much more than a beacon of wealth and opulence.
Reserve Bank of India (RBI) Governor Shaktikanta Das said despite the moderation seen in first quarter gross domestic product growth (GDP), the Indian economy is likely to achieve full year growth of 7.2 per cent as projected.
Speaking at the FIBAC banking conference, the Governor said, “Fundamental growth drivers of the Indian economy are not slowing, they are gaining momentum and this gives us confidence to say that the Indian growth story remains intact.”
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The Governor said agriculture should perform better during the rest of the year due to a good monsoon and aid a further pick-up in rural demand, while strong investment activity would also see a further boost from government capex picking up pace.
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“It is evident that India is on a sustainable growth path. Consumption and investment demand, the two main drivers of growth, are growing in tandem. Overall, the RBI’s projection of GDP growth at 7.2 per cent for 2024-25 does not appear out of place,” he added.
Currently the balance between inflation and growth is well poised but reiterated the need to maintain price stability to support growth over the medium to longer term, he said. It is the headline inflation that matters.
It is the headline inflation with food inflation having a weight of 46 per cent that the people understand,” Das said.
He added that with the monsoon progressing well, there is greater optimism that the food inflation outlook could become more favourable over the course of the year.
“We have to remain watchful of how the forces impacting inflation play out. We must successfully navigate the last mile of disinflation, and preserve the credibility of the flexible inflation targeting framework which is a major structural reform,” Das said.
It is to be noted that India’s economic growth slowed to 6.7 per cent year-on-year in the April-June quarter, below the polled estimate of 6.9 per cent and the RBI’s projection of 7.1 per cent , as a decline in government spending during national elections weighed.
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