Reserve Bank of India Governor Shaktikanta Das. Photo: AFP

India’s central bank governor says the country’s economy will grow at the projected 9.5% this fiscal as the growth impulses are strong.

At a function organized by financial daily Business Standard, Governor Shaktikanta Das credited the measures taken by the government and the Reserve Bank of India for the faster-than-expected recovery so far. He said the fiscal and taxation reforms have played a key role in driving growth and reviving confidence.

Das cited as growth drivers a slew of measures taken by the government after the pandemic struck in March 2020, including tax cuts on fuels, tax resolution for the telecom sector, annulling of the retro tax legislation, sale of Air India, plans to sell some of the public sector banks and production linked incentive scheme.

“Though soaring global crude prices and many geopolitical issues along with other global headwinds are challenges to growth, the overall growth outlook is very positive for us. I am very confident that our GDP will comfortably grow by 9.5% this fiscal because all growth impulses are very strong, and the fast-moving indicators are stronger.”

He said the recent decision by the federal government to cut the excise duty on diesel and petrol is significantly positive for inflation. He said food inflation is now under control, but core inflation continues to remain elevated. Inflation in India is mainly caused due to the supply-side factors, which have been addressed by the government, he added.

He said the indications coming from bankers is that investment loans are making a slow come back and will pick up steam from the next fiscal. “Our recent interaction with bank CEOs make me confident that demand for investment capital is making a slow come back and should gather momentum from the next fiscal,” he said.

It may be recalled that in July for the first time retail loan books ($28.58 trillion rupees) surpassed corporate loan books (28.28 trillion rupees). Regarding this, Das said, “Loans will go where there is demand. As of now, there is great demand for housing loans for one as we are now, in the lowest interest rate regime and ample liquidity, and for another, many people are looking for more spacious homes due to the pandemic.”

As for the future, he said the monetary measures have almost reached their limits. Going forward the government has to be in the forefront to drive faster growth and the central bank can continue to support to revive the economy ravaged by the pandemic, he added.