Shaktikanta Das: India's journey from crisis to confidence

Speech by Mr Shaktikanta Das, Governor of the Reserve Bank of India, at an event organised by the Confederation of Indian Industry (CII), Davos, 17 January 2024. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
30 January 2024

It gives me great pleasure to be here at Davos for the annual meeting of the World Economic Forum. While the winter outside is cold, the warmth of coming together of eminent leaders and experts from diverse fields more than compensates for it. These meetings assume greater relevance when fundamental changes are taking place in a global scale that would potentially shape our common destiny. I thank the Confederation of Indian Industries (CII) for giving me this opportunity to speak at this event.

Recent information on the global macroeconomic front has been somewhat reassuring with inflation gradually descending closer to the target, even as growth has held up better than expected. The odds of a soft landing have increased and this has enthused the financial markets. Financial conditions have eased, and markets have scaled new highs, raising concerns that they might be running ahead of themselves. At this critical juncture, certain hard facts have to be kept in mind, namely, global growth is slowing down; geopolitical situation continues to be fragile with new flash points and fear of supply chain disruptions; geo-economic fragmentation remains unabated undermining global trade; and the daunting climate related challenges are holding their ground.

Given this global setting, I propose to speak on the broad theme of India's journey from crisis to confidence. I shall first dwell upon our recent experience in maintaining macroeconomic and financial stability, which are the prime responsibilities of a central bank. I shall then talk about the emerging fintech space and payments ecosystem that have become the hallmark of India's success in financial innovation and inclusion. Finally, I propose to end with some concluding remarks.

Macroeconomic Stability

Amidst an uncertain and challenging global macroeconomic environment, the Indian economy presents a picture of confidence, positivity and optimism. Recent growth outturns have surprised most forecasts on the upside. After clocking real gross domestic product (GDP) growth of 7.2 per cent in 2022-23, real GDP is expected to grow by 7.3 per cent during 2023-24 according to the latest release by the National Statistical Office (NSO). With strong domestic demand conditions, India remains the fastest growing major economy and is now the fifth largest economy in the world. In fact, in purchasing power parity (PPP) terms, India is already the third largest economy. The International Monetary Fund (IMF) has projected that India's contribution to world growth will rise from the current 16 per cent to 18 per cent by 2028. Strong domestic demand remains the main driver of growth, although there has been a significant increase in Indian economy's global integration through trade and financial channels. Higher reliance on domestic demand cushioned India from multiple external headwinds.