Not complacent amid rapidly evolving global conditions: Shaktikanta Das

New Delhi, Oct 22:  As the Indian economy continues to present a picture of stability and strength, the Reserve Bank of India (RBI) Governor Shaktikanta Das has stressed that they are not complacent, especially amid rapidly evolving global conditions. According to him, the balance between inflation and growth is well-poised and India’s growth story remains intact.

“Inflation is on a declining path, although we still have a distance to cover. The external sector demonstrates the strength of the economy. Forex reserves are scaling new peaks. Fiscal consolidation is underway. The financial sector remains sound and resilient,” he said in the latest RBI monthly bulletin. Das further added that global investor optimism in India’s prospects is perhaps at its highest ever.

“We are, however, not complacent, especially amid rapidly evolving global conditions,” he said, adding that "we stand unambiguously committed to ensure durable alignment of inflation with the target". According to the Central Bank, private final consumption expenditure (PFCE) the mainstay of aggregate demand has rebounded strongly, growing at 7.4 per cent in Q1 FY25 and contributing 4.2 percentage points to the overall GDP growth.

“Rural demand is showing a gradual pickup. While motorcycle sales continued to record upbeat growth in April-August 2024, tractor sales expanded in June-July 2024,” according to the RBI. Moreover, the demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) contracted by 16.6 per cent in Q2 FY 2024-25, reflecting an improvement in farm sector employment.

“Spending on fast moving consumer goods (FMCG) in the rural areas bodes well for rural demand. The positive outlook for agriculture, supported by above normal south-west monsoon (SWM) rainfall, higher cumulative kharif sowing and improved reservoir levels augurs well for sustaining the revival in rural demand,” the RBI document emphasised. Domestic growth has sustained its momentum, with private consumption and investment growing in tandem, it added.