India's economic growth may exceed 7% this year, says RBI governor

New Delhi: RBI Governor Shaktikanta Das said India's growth for 2022-23 is expected to be more than the advance estimate of 7%on the back of economic momentum maintained in the third and fourth quarters of the last fiscal. "There is a possibility that it could be even more...it will not be a surprise if the GDP growth of last year comes slightly above 7%."

As per the estimate in February, the economy is estimated to grow at 7% in 2022-2023 against 8.7% in the preceding fiscal.

"It initially appeared in the third quarter that there was a pent-up demand which was supporting the economic activity, but all the economic indicators in the fourth quarter of last financial year show that economic activities sustained momentum," said the official.

"In fact, all the high-frequency indicators, around 70 of them, which we monitored in the Reserve Bank of India, almost all of these high-frequency indicators, the momentum was maintained in the fourth quarter. So, therefore, we should not be surprised if the growth is slightly more than 7%," he added.

Speaking about the global scenario, Das said: "The coexistence of high inflation and banking stress is complicating the responses of central banks, as they face a trade-off between the risk of either straining financial markets or having to tolerate a longer period of high inflation. Amidst these global uncertainties, the Indian banking system remains stable and resilient with strong capital and liquidity positions, improving asset quality, better provisioning coverage, and improved profitability."

He also addressed the concerns about inflation. "The war on inflation is not over; we have to remain alert. There is no room for complacency. We will have to see how the El Nino factor plays out. Geopolitical uncertainties, and declining merchandise trade due to a contraction in global trade could also add to downside risks to growth."

As per data, India's annual retail inflation eased to 4.7% in April from 5.66% in the previous month. "This month's retail inflation data, scheduled to be released on June 12, "could perhaps be lower." The RBI targets inflation at 4%, with a tolerance level stretching up to two% side on either side.

He added that the fiscal deficit is on a consolidation path. "So, on the back of macroeconomic stability and a robust financial sector...the percentage of gross non-performing assets of the banking sector at the systemic level was 4.4% at the end of December 2022."

"We have the advantage of demography, which again is a huge opportunity for India. And it's something that will eventually add to our potential output or what some people prefer to call India's growth potential. That's a theme, which will play out in the medium to long term," he added.