RBI raises FY24 growth forecast to 7%, holds rates for 5th time in a row – Times of India

MUMBAI: The RBI on Friday raised the GDP growth projection for the current fiscal year to 7% from the earlier 6.5% and kept interest rates on hold for the fifth time in a row, cautioning that rates may remain elevated for an extended period as inflation is nowhere near its target of 4%.
“Against this unsettled global economic backdrop, the Indian economy presents a picture of resilience and momentum.The real GDP growth for Q2 of the current financial year has exceeded all forecasts. The fundamentals of the Indian economy remain strong with banks and corporates showing healthier balance sheets, fiscal consolidation on course, external balance remaining eminently manageable, and forex reserves providing a cushion against external shocks. These factors, combined with consumer and business optimism, create congenial conditions for sustained growth of the Indian economy. Looking ahead, it is our endeavour to further build on these fundamentals which are the best buffer against global shocks in today’s uncertain world,” said RBI governor Shaktikanta Das.

Das also said there is no immediate prospect of a policy “loosening”, and warned of uncertainties in future inflation management, mainly due to unpredictable food prices and anticipated elevated consumer price index (CPI) data for November.
Another indication of the likelihood of prolonged high-interest rates was RBI’s projection of 4.7% inflation for the quarter ending December 2024, surpassing its 4% target. This marks the first time that RBI is projecting inflation for five quarters ahead.
While Das was cautious in respect to prices, he exuded confidence in respect to growth. “India’s GDP growth remains resilient and robust as reflected in our projection of 7% growth in the current year. Current account deficit (CAD) is expected to be modest and comfortably financed, and foreign exchange reserves at $604 billion provide a strong buffer against global spillovers,” said Das. Bankers said the policy signalled that growth is expected to surge and price pressures are likely to stabilise.

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