India can sustain high economic growth, says RBI bulletin
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New Delhi: The Reserve Bank of India (RBI) released its March Bulletin on Tuesday, containing an article on the 'State of Economy' that suggested India has the potential to sustain a growth rate of 8% or higher annually.
Authored by a team led by RBI Deputy Governor Michael Debabrata Patra, the article highlighted India's recent economic performance and the conducive macroeconomic conditions that could propel its growth trajectory.
According to the article, India has seen robust GDP growth averaging above 8% over the period 2021-24. Despite the global economy witnessing a slowdown in growth, India's real GDP surged to a six-quarter high in the October-December period of 2023-24. This growth was fueled by strong momentum, robust indirect taxes, and reduced subsidies.
The RBI bulletin underscored the favorable economic conditions in India, including a modest current account deficit, resilient external buffers, and fiscal consolidation over the past three years. Furthermore, it highlighted the sound and healthy balance sheets in the financial sector, indicating the potential for productive credit intermediation to support economic resurgence.
"Financial markets are reflecting these favorable formations. Capital inflows have resumed strongly as investor interest floods back into India," the article stated.
Emphasizing the role of technology in driving growth opportunities, the authors suggested that India should focus on building world-class infrastructure, strengthening manufacturing bases, developing a high-quality labor force, and establishing global leadership in services.
It also noted a revival in investment-driven aggregate demand, with indications of a private capex cycle revival. Additionally, it mentioned the significant progress in infrastructure development, including the construction of four-lane roads and access-controlled highways, aimed at creating a world-class road network by 2037.
The report also highlighted robust demand in premium consumer businesses and the growth potential in small towns across various lifestyle segments.
The article suggested that India's favorable economic fundamentals and conducive environment provide an opportunity to leverage these strengths for sustained and higher economic growth in the medium to long term.