👌👌👌👌👌India poised to rebound to 8% growth trend: RBI Deputy Governor Patra | Economy & Policy News – Business Standard

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Headline inflation likely to remain on track throughout 2025-26

(Photo: Reuters)

Following the pandemic recovery, India is likely to return to its long-term growth trend of around 8 per cent, Michael Debabrata Patra, deputy governor, Reserve Bank of India (RBI), said while speaking at the New York Fed Central Banking Seminar organised by the Federal Reserve Bank on Monday. The speech was released on the RBI website on Tuesday.

Patra said that the RBI’s projections show that India’s gross domestic product (GDP) will grow at 7.2 per cent in the current financial year and 7 per cent in the next financial year. Thereafter, there is a strong likelihood that India’s growth will revert to the 8 per cent trend.

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“Our projections show that India’s real GDP growth will be 7.2 per cent in 2024-25 and around 7.0 per cent in 2025-26 in a cyclical correction to the rebound from the pandemic. Thereafter, there is a strong likelihood that India’s growth will revert to the 8 per cent trend.”

The deputy governor said that the best defence against global risks is to strengthen macroeconomic fundamentals and build sufficient buffers, supported by prudent policies.

“We believe that the best defence against global risks is to strengthen macroeconomic fundamentals and build adequate buffers, supported by prudent macroeconomic policies,” he said.

India’s foreign exchange reserves reached an all-time high of $704.9 billion on September 27, 2024, before slightly declining to $690.4 billion as of October 11. These reserves are sufficient to cover 11.8 months of imports and exceed 101 per cent of the country’s total external debt as of end-June 2024. During 2024 (up to October 11), India’s reserves saw a net increase of $68 billion, positioning the country as the second-largest accumulator of foreign reserves, behind only China, among major reserve-holding nations.

In terms of inflation, Patra said that projections suggest price pressures will persist through October and November, with headline inflation expected to realign with the target by December 2024 and remain on track throughout 2025-26.

The RBI has projected inflation at 4.5 per cent for the current financial year, based on the assumption of a normal monsoon and stable supply conditions. However, retail inflation surged to a nine-month high of 5.49 per cent in September, driven by rising food prices and base effect.