India better placed to withstand global uncertainties: Shaktikanta Das

India is better placed to withstand global uncertainties amid a decelerating world trade, said Reserve Bank of India (RBI) Governer Shaktikanta Das. 

“The global economy continues to remain fragile. World trade is decelerating amidst a global tide of protectionism. Despite the significant restoration of global supply chains, factors like elevated debt levels, lingering geopolitical hostilities, and extreme weather conditions aggravate the risks to global growth and inflation outlook.”

The RBI kept the repo rate unchanged at 6.50 per cent in its four monetary policies, indicating a stance aimed at stabilising economic conditions.

The central bank expects inflation trends to remain steady from October to December 2023 at 5.6 per cent, sustaining at 5.2 per cent for the subsequent quarter until June 2024. However, a dip is expected by July–September 2024 to 4.0 per cent, followed by a marginal increase in the final quarter to 4.7 per cent.

“We have now reached a stage when every action has to be thought through even more carefully to ensure overall macroeconomic and financial stability, more so because the conditions ahead could be fickle. We have to remain vigilant and ready to act, as per the evolving outlook. India is better placed to withstand the uncertainties compared to many other countries,” said Das. 

Domestic growth

Das said that economic activity in the country witnessed buoyancy in the second quarter, led by strong domestic demand.

“Economic activity exhibited buoyancy in Q2, aided by strong domestic demand. GDP posted a robust growth of 7.6 per cent in Q2:2023-24, driven by investment and government consumption,” said Shaktikanta Das.

“Turning to Q3, two-thirds of rabi sowing has been completed despite the late harvest of kharif crops in some states. The manufacturing sector gained strength with easing input cost pressures and a pickup in demand conditions. Eight core industries recorded healthy growth in October and have continued their high growth since June this year. The purchasing managers’ index (PMI) for manufacturing rose in November. The buoyancy of the services sector has remained intact, as reflected in high-frequency indicators. GST collections at Rs 1.68 lakh crore in November 2023 were buoyant. Services PMI displayed healthy expansion in November,” he said.

GDP projections

Das also shared GDP projections, estimating real GDP growth for the ongoing fiscal year at 7 per cent. Quarter-wise breakdowns revealed an anticipated 6.5 per cent growth in Q3 and 6 per cent in Q4. Looking ahead to FY25, Q1 is projected at 6.7 per cent, followed by Q2 and Q3 at 6.5 per cent and 6.4 per cent, respectively, with perceived balanced risks.

"Real GDP growth for the current year 2023–24 is projected at 7 per cent, with Q3 at 6.5 per cent and Q4 at 6 per cent. Real GDP growth for Q1 of 2024–25 is projected at 6.7 per cent, for Q2 at 6.5 per cent, and for Q3 at 6.4 per cent. The risks are evenly balanced," the Governor said.