The Indian economy is poised for potentially a stable high growth phase and is in a strong position in the context of significant risks that the country is facing, RBI’s monetary policy committee member Shashanka Bhide said on Sunday.

He said domestic economic activity is expected to sustain its momentum as the growth of income would support domestic demand. Besides, supply capacity has gone up, reflected by high levels of investment spending in the last couple of years.

“In terms of growth momentum and inflation trajectories Indian economy is poised for potentially a stable high growth phase.

“It is also in a strong position in the context of significant risks that are also facing us,” he said.

The current official estimate of GDP growth in 2023-24 is 8.2 per cent, accelerating from 7 per cent in the preceding year.

Earlier this month, the Reserve Bank of India pegged the GDP growth rate for 2024-25 at 7.2 per cent.

Bhide noted that the monsoon rainfall, which is expected to be normal this year, is a significant positive factor for growth as well as bringing down food inflation.

While noting that improvement in global demand conditions are necessary to spur external demand for goods and services, he said sizable capital inflows supporting investment, reflect both the supply side efficiencies and high growth potential of the economy both in terms of domestic demand as well as
India’s exports.

Responding to a question on inflation, Bhide said the concerns are mainly in terms of the impact of risks from any adverse weather and climate events and disruptions in global supply chains.

“Our own overall CPI (consumer price index) inflation is marked by high levels of food inflation and a decline in this component of the overall inflation is crucial going forward,” he opined.

Bhide said while food inflation is at a high level, averaging about 8 per cent during Jan-May 2024, the overall CPI-based inflation has moderated to below 5 per cent during March-May 2024.

PTI