The Governor of the Reserve Bank of India (RBI) Shaktikanta Das said that the South Asian country can achieve sustainable economic growth of up to 8% in the medium term.
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| The expected growth rate of the Indian economy in the next few years will be around 7.5%. Illustrative photo. (Source: Elitebusiness Magazine) |
The comments came after data showed India's gross domestic product (GDP) growth slowed to 6.7% in the second quarter of 2024, down from 8.2% in the same period last year.
This statistic increases pressure on RBI to start the rate cutting cycle soon.
India's expected growth over the next few years will be around 7.5 percent, Mr. Das said.
"While it is difficult to pinpoint the exact growth rate for the world's most populous country, a growth rate of 7.5-8% could be sustainable in the medium term," he said.
Previously, the International Monetary Fund (IMF) rated India as the world's fastest growing major economy. Meanwhile, Goldman Sachs predicted that the South Asian country would become the world's second largest economy by 2075, surpassing Japan, Germany and the US to come in second only to China.
However, India's growth rate has slowed in recent quarters.
In July 2024, the IMF warned that India's economic growth rate could slow to 6.5% by 2025.
The move comes as major central banks around the world have begun easing monetary policy recently, including the European Central Bank (ECB), the Bank of England and the Swiss National Bank.
The US Federal Reserve is expected to join the wave of interest rate cuts this week, adding pressure on India to start easing monetary policy.
RBI Governor says it could be 'rate cut season'
However, he stressed that India's monetary policy is largely based on domestic macroeconomic conditions, including inflation and domestic growth dynamics, along with related prospects.
He also noted that while India would be interested in policy developments globally, such as the policies of the Fed, ECB or other central banks, the final decision would still be based on internal factors of the Indian economy.
Asked if the RBI's Monetary Policy Committee (MPC) was considering a rate cut in early October, Mr Das replied that he could not confirm this.
According to him, the discussion and decision will be made in the MPC, but the two main factors they consider are growth dynamics and inflation.
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