Market News

By Anup Roy

(Bloomberg) -- The Indian economy is “sailing through smoothly,” even as global growth faces accelerating risks ranging from geopolitical tensions to climate change, according to the country’s central bank governor.

The world’s fastest-growing major economy is “powered by buffers like strong macroeconomic fundamentals, stable financial system and a resilient external sector,” Reserve Bank of India Governor Shaktikanta Das said at a CNBC-TV18 event in Mumbai on Thursday.

The global economy was hit “very hard” by multiple shocks, but synchronized policy action by central banks helped to ease the impact. Even so, the “risk of inflation coming back and growth slowing down do remain,” he said.

The central banker’s optimistic outlook on India’s growth comes at a time when the country is showing a weakening in urban spending. While the RBI has stuck to its economic growth projection of 7.2% for the current fiscal year through March 2025, several economists have been lowering their forecasts, with investment banks like Goldman Sachs Group Inc. predicting 6.5%. 

“Our endeavor in the Reserve Bank has been to seize every opportunity to further strengthen our fundamentals through prudent and proactive policy approach,” Das said.

The RBI has refrained from cutting interest rates despite a pivot by the Federal Reserve and several other central banks. Das has repeatedly dashed hopes of an immediate rate cut, saying that an easing at this stage would be “very risky” given inflation risks.  

The governor said on Thursday that the tweak to its monetary policy stance to neutral last month gave policymakers “greater flexibility and optionality” to act in sync with the evolving conditions.

A sharp spike in October pushed inflation above the 6% upper end of the central bank’s target, giving the RBI further reason to stay hawkish. 

“We remain consistent with our mandate of price stability, while keeping in mind the objective of growth,” he said. “Our endeavor is to maintain a banking system stability and economic growth — both of which are necessary and complimentary to each other.” 

--With assistance from Preeti Soni.