India's economy has the potential to grow at approximately 7.5% or higher, said  Reserve Bank of India (RBI) Governor Shaktikanta Das. This projected rate exceeds the central bank's current forecast of 7.2% for the current financial year.

Das shared this optimistic outlook during the Bretton Woods Committee's annual Future of Finance Forum in Singapore. He noted that the 7.5% growth rate represents the maximum sustainable rate for the economy without triggering inflation. His comments came in addition to his prepared speech.

Governor Das attributed the slower growth in the first quarter to decreased government spending during the national elections. He explained that the RBI expects a 7.2% economic growth by the end of the year. Addressing global monetary policies, Das remarked, "While quite a few central banks have started treading the path of rate cuts on account of recession worries, many still continue to maintain restrictive stances and refrain from reducing policy rates so as to break the back of inflation persistence."

Das projected a gradual decrease in inflation, anticipating it will drop from 5.4% in 2023-24 to 4.5% in 2024-25, and further to 4.1% in 2025-26. He noted, "Inflation has moderated from its peak of 7.8% in April 2022 into the tolerance band of +/- 2% around the target of 4%, but we still have a distance to cover and cannot afford to look the other way." He emphasized the need for caution, stating, "The momentum of global disinflation is slowing, warranting caution in easing monetary policy."

The RBI Governor also underscored the importance of central banks managing monetary policy carefully while governments should implement proactive supply-side measures. He suggested that potential changes in U.S. monetary policy aimed at achieving a soft landing might offer some hope for a sustained reduction in global inflation.

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