Vice Governor Punam Gupta stated on Thursday that India's economic growth during the financial year until March could approach seven percent, surpassing the central bank's forecast of 6.7 percent. This pace would allow India to remain among the world's largest economies with the fastest growth.
Her optimistic assessment is based on the expectation of a strong quarter from April to June. Gupta shared this information during an event at the Madras School of Economics in Chennai, as reported by the Financial Express. Official data for this period is expected at the end of the current month, while economists' forecasts generally range between 6.9 and 8 percent. Gupta noted that this implies the annual growth rate could be significantly higher, approaching seven percent.
This rapid pace indicates economic resilience despite setbacks such as crop failure due to monsoon deficit and high energy costs. This also explains Gupta's recent more hawkish stance. Protocols from the August meeting of the Reserve Bank of India, published this week, showed that Gupta increased the probability of a later interest rate hike this year.
The Financial Express quotes her saying: 'Going forward, despite these setbacks, I believe 7.5 percent is a given, and we must strive to do better.' Furthermore, Gupta expressed confidence in India's external accounts, stating they will become 'much more favorable.'
Economists anticipate that the country's balance of payments will turn positive in the current fiscal year, reversing previous deficit forecasts. This is largely driven by expectations of foreign currency inflows of up to $80 billion following measures to support the depreciating currency, including a special incentive to attract foreign currency deposits.
Gupta's comments came amid Indian officials becoming more optimistic about the country's economic prospects as the worst fears following the war with Iran did not materialize. This sustained growth prompted Prime Minister Narendra Modi last week to reiterate his goal of making India a developed nation by 2047. Economists suggest that achieving this goal will require a sustained growth rate exceeding 8 percent for at least two decades.
