Das urges private sector to invest ‘massively’

Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday urged the private sector to come forward to support sustainable growth in the economy by investing significantly, especially at a time when there are clear signs of improvement in consumption demand.

Stating that the key demand drivers of consumption, investment and exports need to move together to sustain the economic momentum, Mr Das said: “Higher domestic consumption will help insulate the economy from the vagaries of external uncertainties. Investment remains critical for the sustainable growth of the economy and given the current confluence of favourable factors, the time has come for the private corporate sector to come forward in a big way”.

He said the potential of external demand can also be harnessed to India’s advantage by integrating into global supply chains.

The RBI Governor said that the Indian economy is now at a critical juncture, where large-scale changes are taking place in various economic sectors and markets, and the country is poised for transformation. He said that India’s journey towards becoming an advanced economy is being powered by a unique mix of factors such as a young and dynamic population, resilient and diverse economy, strong democracy and a rich tradition of entrepreneurship and innovation.

Addressing ‘FIBAC 2024’, jointly organised by FICCI and IBA, Mr Das said the Q1 GDP data from the CSO shows that despite a moderation in growth compared to the previous quarter, the underlying growth drivers are “gathering momentum”.

He said, “It is clear that India is on a sustained growth path. Consumption and investment demand… are growing together. Government expenditure of the Center and the states is likely to pick up pace in line with budget estimates in the remaining quarters.” He said that strong balance sheets of banks and corporates have created favorable conditions to further support private capital expenditure.

“The RBI’s GDP growth forecast of 7.2% for 2024-25 does not appear to be unreasonable,” he stressed.

On the issue of inflation, Mr. Das said while there is a balance between growth and inflation, the RBI needs to “successfully cross the final leg of disinflation and maintain the credibility of the flexible inflation targeting (FIT) framework”, which is a key structural reform.

He reiterated, “The best contribution of monetary policy to sustainable growth is to maintain price stability.”