RBI Governor Shaktikanta Das says elevated rates not impinging growth, points to high growth in recent quarters

RBI Governor Shaktikanta Das states elevated rates aren't hindering growth, citing strong economic activity and robust investment intentions.

After opting for a status quo for the tenth consecutive policy review, Governor Shaktikanta Das on Wednesday (October 9, 2024) said the Reserve Bank’s elevated rates are not impinging on growth.

He pointed to the strong economic activity over the last 18 months since the RBI has opted for the status quo to back up his claim.

“At the moment, we do not see any evidence of higher interest rates impinging on growth,” the Governor told reporters in the customary post-policy interaction.

He added that growth continues to be “very robust”, and investment intentions are “quite visible”. “The growth is holding firm, holding steady. So, it would not be correct at this point of time to say that interest rates are impinging on growth,” he added.

India’s GDP expanded by 8.2% in FY24, and the RBI is sticking to its higher-than-consensus estimate of 7.2% for FY25. The first quarter growth decelerated to a 15-quarter low of 6.7%, leading a slew of analysts to peg their estimate between 6.5-7% for FY25.

Some of the members of the rate-setting panel who ended their term recently had also spoken out about their fears of elevated rates hurting the growth in the economy.

To a question on why the RBI has chosen to retain its 7.2% growth estimate for the fiscal, Mr. Das said that a slew of factors including consumption and investment activity make the RBI go towards that number.