RBI Deputy Governor Projects India's Return To 8% Growth Path By 2026

New Delhi, Oct 23 (KNN) Reserve Bank of India Deputy Governor Michael Debabrata Patra has projected India's return to its long-term growth trajectory of 8 percent, following anticipated growth rates of 7.2 percent in FY25 and 7 percent in FY26. 

Speaking at the Federal Reserve Bank's New York Fed Central Banking Seminar on Monday, Patra described these intermediate figures as part of a cyclical correction following the pandemic rebound.

The deputy governor emphasised the critical importance of robust macroeconomic fundamentals and substantial financial buffers in safeguarding against global economic risks. 

This strategy appears to be yielding results, as evidenced by India's foreign exchange reserves reaching a historic peak of USD 704.9 billion on September 27, before moderating to USD 690.4 billion by October 11. 

These reserves now provide coverage for 11.8 months of imports and exceed 101 percent of the nation's external debt as of June 2024.

India's performance in building its foreign reserves has been particularly noteworthy in 2024, with a net increase of USD 68 billion through October 11, positioning the country as the second-largest accumulator of foreign reserves among major economies, surpassed only by China.

Addressing inflation concerns, Patra acknowledged that price pressures are expected to continue through October and November. 

However, he anticipated that the headline inflation rate would align with the RBI's target by December and maintain stability throughout FY26. 

While the RBI had initially projected inflation at 4.5 percent for FY25, recent data shows retail inflation reached a nine-month high of 5.49 percent in September, primarily due to escalating food prices and base effect factors.

(KNN Bureau)