India will become new global growth engine, says RBI Guv

Mumbai: India is poised to become the new growth engine of the world, Reserve Bank of India Governor Shaktikanta Das said on Friday as the central bank retained the country’s GDP growth forecast at 6.5 per cent for 2023-24, notwithstanding the slowing global economy. Invoking Kautilya’s Arthashastra, Das said macroeconomic stability and inclusive growth are the fundamental principles underlying a country’s progress.

“The policy mix that we have pursued during the recent years of multiple and unparalleled shocks has fostered macroeconomic and financial stability,” he said, while unveiling the bi-monthly monetary policy review.

He said the external sector also remains eminently manageable. Das further said the twin balance sheet stress that was encountered a decade ago has now been replaced by a twin balance sheet advantage with healthier balance sheets of both banks and the corporate. “India is poised to become the new growth engine of the world,” he said, observing the global economy is slowing under the impact of tight financial conditions, protracted geopolitical tensions and increasing geo-economic fragmentation. Global trade is contracting, headline inflation is easing but rules above the target in major economies. “In contrast to global trends, domestic economic activity exhibits resilience on the back of strong domestic demand,” the Governor said.

Domestic demand conditions are expected to benefit from sustained buoyancy in services, revival in rural demand, consumer and business optimism, the government’s thrust on capex, and healthy balance sheets of banks and corporates.