At a time when politics has taken centre stage in national discourse, the growth forecast made Wednesday by Shaktikanta Das, governor of the Reserve Bank of India, pegging it as potentially above seven per cent, is a great cause of cheer.
At the start of this financial year, there were apprehensions of the national economy growing much above six per cent, and a clear jump in the middle of the first quarter of the FY is a reason for all Indians to look forward optimistically.
There are two specific subplots here that add to the headline — according to Mr Das, on the supply side, private sector manufacturing has surpassed 75 per cent capacity utilisation mark, and in tandem with a steady revival of private investments, especially in core sector segments like steel and cement, gives the economy a strong push. These are also crucial indicators of demand from connected sectors, like manufacturing, infra and constructions.
The second reason for cheer is greater control over inflation. The retail inflation is likely to dip further, to below the 4.7 mark in May, along with a further reduction in gross non-performing assets (NPAs) in the banking system, as per the RBI boss. This is against a good set of factors working well for the economy in tandem, because it helps banks with more money to lend, and there is no pressure on the Central bank to tinker with interest rates to combat inflation.
Factors like greater core sector and manufacturing demand, lower inflation, more credit availability and growing capacity utilisation are all positive factors which can together work to create the headline optimism of greater growth.
Earlier, the RBI had pegged the growth projections at 6.5 per cent, whereas several international agencies, including the International Monetary Fund (IMF), were less optimistic about the Indian economy, and projected growth at 5.9 per cent. Now, a normal monsoon is all India needs to keep its chin up and hold a broad smile on the economic front.