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Business News/ News / India/  Govt agrees with RBI’s raised growth estimates: DEA secretary Ajay Seth
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Govt agrees with RBI’s raised growth estimates: DEA secretary Ajay Seth

He added, however, that the Indian economy still faces stickiness on inflation and supply-side measures will continue to be taken to keep food prices in check.

Economic affairs secretary Ajay Seth (Photo: Reuters)Premium
Economic affairs secretary Ajay Seth (Photo: Reuters)

The government concurs with the Reserve Bank of India's (RBI’s) decision to revise India’s FY24 economic-growth estimate to 7% as the country has achieved high growth during the first two quarters of the fiscal, Ajay Seth, secretary of the department of economic affairs, said on Friday.

Speaking on the sidelines of FICCI's annual convention and annual general meeting, Seth said despite recording high growth in the first two quarters, the Indian economy still faces stickiness on inflation and supply-side measures will continue to be taken to keep food prices in check.

"Certainly, we agree with the RBI's assessment. It is quite obvious [with] the growth that India has achieved in the first half of the year and the two months of the current quarter. HFIs (high frequency indicators) are showing good momentum so this upward revision is well spaced," Seth said.

"But stickiness is there. The policy goal (on inflation) is 4%, plus or minus 2%. We are some distance away from [achieving] 4%. Whatever supply-side measures have to be taken for food products will continue to be taken," Seth added.

The Indian economy surpassed expectations to clock impressive 7.6% growth in the September quarter, retaining its crown as the world’s fastest-growing major economy after clocking 7.8% growth during the June quarter. The RBI had earlier forecast FY24 growth at 6.5% before revising it on Friday.

India’s economy is growing rapidly even as other major global economies are slowing down thanks to steep interest rates and other factors. The International Monetary Fund (IMF) has predicted that the Indian economy will outperform Indonesia’s (4.93%), China’s (4.9%), the US’s (2.93%), Japan’s (1.2%), France’s (0.69%), the UK’s (0.62%) and Germany’s (-0.37%) in the September quarter.

The IMF has also raised its FY24 growth projection for India to 6.3% from its July estimate of 6.1%, citing stronger-than-expected consumption during Q1.

Seth said geopolitical issues, such as the conflicts in West Asia and Ukraine, continue to pose challenges. "But spillover of the conflict (in Israel) has not happened and that is one potential risk that is well contained. Oil prices remain subdued and that is good for the global economy," he added.

The Israel-Hamas conflict, which erupted in early October, has had several economic repercussions, including fluctuations in oil prices and commodity shortages. A report from the Global Trade Research Initiative (GTRI) cautioned that the conflict risks expanding across the Middle East, potentially jeopardising a nascent peace agreement between Israel and Saudi Arabia. This could affect the India-Middle-East-Europe Connectivity Corridor (IMEEC) initiative, which aims to enhance links between these regions through rail and sea routes.

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Published: 08 Dec 2023, 05:51 PM IST
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