India’s growth story intact; need for reforms in land, agri markets: RBI

Reserve Bank Governor Shaktikanta Das on Thursday said the Indian growth story remains intact with consumption and investment demand growing in tandem, and emphasised that past reforms need to be augmented by reforms in land, labour and agricultural markets.

The governor also asked financial institutions to create tailored products to suit businesses promoted by women and MSMEs without diluting underwriting standards.

In his inaugural speech at the annual FIBAC 2024 Conference organised jointly by FICCI and IBA, Das spoke on issues relating to strengthening the financial sector and expectations from them.

The governor said that the Indian economy is forging ahead with macroeconomic and financial stability, and a favourable growth-inflation balance. He said the Indian economy is now at a critical juncture and massive changes are taking shape in various sectors and markets.

He said the country is geared for orbital shifts and the nation’s journey towards becoming an advanced economy is drawing strength from a unique blend of factors — a young and dynamic population, a resilient and diverse economy, a robust democracy, and a rich tradition of entrepreneurship and innovation.

The National Statistical Office (NSO) has placed India’s GDP growth at 6.7 per cent in the first quarter of 2024-25. “Notwithstanding the moderation in growth from the previous quarter and below our projection for Q1, the data shows that the fundamental growth drivers are gaining momentum. This gives us confidence to say that the Indian growth story remains intact,” Das said.

He said private consumption, which is the mainstay of aggregate demand with a share of around 56 per cent in GDP, has rebounded to 7.4 per cent growth from a feeble 4 per cent growth in the second half of the previous year, reconfirming the revival of rural demand.

“The headline number (Q1 GDP), however, came lower against the backdrop of muted government expenditure of both the centre and the states, perhaps due to the Lok Sabha elections. Excluding government consumption expenditure, GDP growth works out to 7.4 per cent,” he said.