India Should Enhance Productivity To Maintain Growth At 7 Per Cent In FY25, Says RBI MPC Member

Shashanka Bhide said that India needs to focus on improving productivity to stabilise the food prices. The global environment remains one of the major concerns, he noted

India can maintain a growth momentum of 7 per cent in the current fiscal year, backed by strong monsoon, increased farm productivity, and better global trade, Shashanka Bhide, a member of the RBI Monetary Policy Committee (MPC) said on Monday.

In a conversation with PTI, the official said that the economy is predicted to register growth rate of almost 8 per cent in 2023-24 due to the strong performance of manufacturing and infrastructure sectors. The economic momentum in the 2024-25 fiscal year (FY25) is expected to be supported by the agriculture sector and improvements in global trade.

Commenting on the long-term aspects of the Indian economy, Bhide said that the country needs to focus on improving productivity to stabilise the food prices. The global environment remains one of the major concerns, he added.

Bhide noted, “The slow pace of recovery in global demand on one hand and supply chain disruptions on the other hand... if the ongoing geopolitical conflicts are not resolved quickly, (it will) pose significant challenge in terms of demand as well as input prices. We should also be prepared for minimising the adverse impact of extreme weather events on output.”

Notably, the IMF and Asian Development Bank (ADB) both gave upwards revision in their growth projections for the Indian economy. The IMF said predicted the economy to grow at 6.8 per cent in FY24, while the ADB said a growth rate of 7 per cent can be expected in the period under review. 

In terms of a solution for surging food prices, Bhide said that weather conditions affect perishable commodities like vegetables and the resulting price rise is short-term, however, these developments generate a lasting impact.

As such, processing and preservation of commodities need to be prioritised, and supply-side measures to increase crop resistance should be undertaken, he added.

He noted that the agricultural commodities market needs to be modernised and the supply response to evolving demand should be improved to keep a tab on prices.