RBI Governor Shaktikanta Das on Thursday said that the Indian economy is now at a critical juncture with massive changes taking shape in various economic sectors and markets; and the country is geared for orbital shifts.

“India’s journey towards becoming an advanced economy is drawing strength from a unique blend of factors including young and dynamic population; resilient and diverse economy; robust democracy, and a rich tradition of entrepreneurship and innovation,” the RBI governor said while speaking the flagship event of FICCI and IBA – ‘FIBAC 2024’.

Das added that the moderation in growth witnessed from the previous quarter and RBI’s projection for Q1 shows that the fundamental growth drivers are gaining momentum.

“India is on a sustained growth path. Consumption and investment demand are growing in tandem. This gives us confidence to say that the Indian growth story remains intact. RBI’s projection of GDP growth at 7.2 per cent for 2024-25 does not appear out of place,” he emphasised.

Regarding the growth prospects in the medium to long term, Das added that Indian economy is on the cusp of transformational shifts.

“The growth is on a rising trend, despite modest global growth and continuing global challenges, shows that structural drivers are playing a bigger role in India’s macroeconomic outcomes. These include policy push on creating robust physical infrastructure; growing digital public infrastructure; innovation and technological advancements across sectors and critical reforms in key areas,” he noted.

To realise the aspirations of transforming from an emerging to an advanced economy by 2047, the Governor asserted that Indian economy would need a multi-pronged and a multi-sectoral approach. “Our focus should be on employing all energies of growth from both supply and demand side,” he added.

Speaking on inflation, Das said that with the monsoon progressing well and the healthy kharif sowing, there is greater optimism that food inflation outlook could become more favourable over the course of the year. “We have to remain watchful of how the forces impacting inflation playout. The balance between inflation and growth is well-poised. We must successfully navigate the last mile of disinflation and preserve the credibility of flexible inflation targeting (FIT) framework which is a major structural reform. The best contribution that monetary policy can make for sustainable growth is to maintain price stability,” he emphasised.

Speaking on strengthening the financial sector, Das said that all key indicators of the financial sector show a robust health. This resilience, combined with other forces, can act as critical driving forces for India’s future. The financial sector needs to further deepen financial inclusion, broaden access to credit, drive innovation in digital banking, foster sustainable finance and build robust financial ecosystem that can withstand emerging challenges and facilitate a higher growth trajectory. We should also be mindful of the non-financial risks which may affect the financial sector.

The governor also highlighted the 2 key areas for the financial sector to focus on which include improving female labour participation and supporting the MSMEs.

Speaking on the adoption of technology by RBI, Das said that series of initiatives have been taken to facilitate development of digital public infrastructure and innovation. The commencement of RBI’s pilot project for frictionless credit i.e. end-to-end digital platform of ‘Unified Lending Interface’ (ULI) is expected to revolutionise access to credit, especially for farmers and MSMEs.

Just like UPI transformed the payments ecosystem, we expect that ULI will play a similar role in transforming the lending space in India. “The ‘new trinity’ which can be the gamechanger for our progress in years to come will be the trinity of JAM-UPI-ULI,” he added.

Anish Shah, president of FICCI, said, “To achieve a Viksit Bharat and reach a $30 trillion economy by 2047, the manufacturing sector needs to grow 16 times in the next 23 years. The digital tools that India has set up are essential to get there.”

M V Rao, chairman, IBA and MD & CEO, Central Bank of India said, “Our priority should be to build an environment where financial services are efficiently accessible to the 1.4 billion people, from mobile banking to payments.”

Jyoti Vij, Director General, FICCI said to achieve the goal of Viksit Bharat will require adequate financing and with banking being the dominating player in the financial eco-system, it has significant role to play in realizing the goal.