Reserve Bank of India (RBI) Governor Shaktikanta Das during his MPC speech on Wednesday projected India's economic growth at 6.4 per cent for 2023-24, broadly in line with the estimate of the Economic Survey tabled in Parliament last week. Das said that the Gross Domestic Product (GDP) growth is estimated at 7 per cent in 2022-23, according to the first advance estimate of the National Statistical Office (NSO).
The Economic Survey 2022-23 projected a baseline GDP growth of 6.5 per cent in real terms for the next fiscal year.
Amid volatile global developments, the Indian economy remains resilient, said RBI Governor Shaktikanta Das while unveiling the last bi-monthly monetary policy of the current fiscal year.
"Available data for Q3 and Q4:2022-23 indicate that economic activity in India remains resilient. Urban consumption demand has been firming up, driven by a sustained recovery in discretionary spending, especially on services, such as travel, tourism and hospitality.
"Rural demand continues to show signs of improvement as tractor sales and two-wheeler sales expanded in December," he said.
The governor also said passenger vehicle sales and domestic air passenger traffic posted robust year-on-year growth. Several high-frequency indicators also point towards the strengthening of activity. He pointed out that investment activity continues to gain traction. Non-food bank credit expanded by 16.7 per cent (YoY) as of January 27, 2023. The total flow of resources to the commercial sector has increased by Rs 20.8 lakh crore during 2022-23 so far against Rs 12.5 lakh crore a year ago.
"...the expected higher rabi output has improved the prospects of agriculture and rural demand. The sustained rebound in contact-intensive sectors should support urban consumption. Broad-based credit growth, improving capacity utilisation, government’s thrust on capital spending and infrastructure should bolster investment activity," the governor said.
On the other hand, protracted geopolitical tensions, tightening global financial conditions and slowing external demand may continue as downside risks to domestic output, he added. "Taking all these factors into consideration, real GDP growth for 2023-24 is projected at 6.4 per cent with Q1 at 7.8 per cent; Q2 at 6.2 per cent; Q3 at 6.0 per cent; and Q4 at 5.8 per cent. The risks are evenly balanced," Das said.
The Economic Survey 2022-23 projected a baseline GDP growth of 6.5 per cent in real terms for the next fiscal, lower than the current year. It said the projection is broadly comparable to the estimates provided by multilateral agencies, such as the World Bank, IMF, ADB, and the RBI, domestically. The actual outcome for real GDP growth will probably lie in the range of 6 per cent to 6.8 per cent, depending on the trajectory of economic and political developments globally.