In a recent article published in the Reserve Bank of India's March Bulletin, the central bank expressed optimism about India's economic growth potential, suggesting that the country could sustain an annual gross domestic product (GDP) growth rate of 8 per cent or even higher.

The article, authored by a team led by RBI Deputy Governor Michael Debabrata Patra, highlighted that India's GDP growth has averaged above 8 per cent over the period 2021-24. The growth has been fuelled by strong momentum, robust indirect taxes, and lower subsidies, leading to a six-quarter high in real GDP growth in the October-December period of 2023-24.

The authors stressed that India's macroeconomic configuration is conducive to further growth, with high visibility of structural demand and healthier corporate and bank balance sheets expected to drive growth going forward. They noted that while the global economy is facing challenges and uncertainties, India's economic fundamentals remain strong.

According to the article, India's current account deficit is modest, external buffers are resilient, and fiscal consolidation has been ongoing for three consecutive years. Additionally, the financial sector's balance sheets are sound, providing ample support for productive credit needs.

The authors highlighted the resumption of strong capital inflows into India and pointed out that technology is offering new growth opportunities, making it imperative for India to focus on building world-class infrastructure, manufacturing bases, and a high-quality labour force.

The article also reinforced the investment-driven aggregate demand in the third quarter of 2023-24, with indications of a revival in private capital expenditure. It mentioned the significant progress in infrastructure development, particularly in the construction of roads and highways, which is set to create a world-class road network by 2037.

Furthermore, the article highlighted the robust demand outlook for premium consumer businesses and the growth opportunities emerging in small towns across various lifestyle segments.

(With PTI inputs)

The growth has been fuelled by strong momentum, robust indirect taxes, and lower subsidies.

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