New Delhi

Seen as an important declaration, the Chief of the Reserve Bank of India (RBI), Shaktikanta Das, discussed his positive outlook for India's economic trajectory in a recent conversation with CNBC. According to Das, India can potentially achieve sustainable growth of up to 8 per cent in the coming years. This optimistic prediction comes amid a backdrop of robust economic recovery following the challenges posed by the pandemic.

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Factors responsible for growth

Das highlighted that several key factors contribute to this potential growth, including strong domestic demand, increased foreign investment, and comprehensive government reforms. He noted, "The Indian economy is on a strong footing, boosted by a resurgence in consumer confidence and an uptick in manufacturing activities. These elements are crucial for driving sustainable development in the long run."

Furthermore, he emphasised the importance of continuous monetary policy support to sustain this upward momentum. "The RBI will remain vigilant in ensuring that inflation is kept in check while facilitating growth," he added.

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In a reaction to the governor’s 8 per cent prediction on growth, Eswar Prasad, professor of international trade and economics at Cornell University, told CNBC that the figure seemed like more of an “aspiration” than a “realistic” goal at this stage.

It is also to be noted that, in an August bulletin by the Reserve Bank of India, the governor highlighted an expected 7.2 per cent real GDP rate (adjusted for inflation) for 2024 to 2025, with the same figure for the first quarter of 2025 to 2026 fiscal year, with risks either side being “evenly balanced.”

Governor on the Fed rate cuts

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On the question of the Federal Reserve rate cut Das stated that, “We will not be influenced by how much of a rate cut they are doing, whether it is 25 or 50 or how often and what is the frequency of their rate cuts.”

Additionally, the Reserve Bank of India Chief pointed out that the government's focus on infrastructure development and digital transformation is paving the way for enhanced economic activities. "Significant investments in infrastructure will not only create jobs but also stimulate further economic engagement across various sectors," he explained.

The future trajectory of the Indian economy

Hence, the RBI Chief's insights work as a ray of hope for stakeholders in the Indian economy, offering a clear vision of the potential for sustainable growth. As the nation gears up for the future, the emphasis remains on strategic measures to make the most of this growth potential effectively.

Further, India has recently been described by the International Monetary Fund as “the world’s fastest-growing major economy,” whereas, Goldman Sachs believes that India is poised to become the world’s second-largest economy by 2075, overtaking Japan, Germany, and the US to become second only to China thus underlining the growth potential and the trajectory for the world's fastest-growing major economy. 

With these developments, India stands at a crucial moment where targeted government policies, improvements in education, and healthcare, and well-planned capital expenditure in critical sectors could significantly bolster its economic landscape, making it an attractive destination for both domestic and international investors.