Reserve Bank of India (RBI)'s Governor, Shaktikanta Das delivered an optimistic outlook on India's second-quarter gross domestic product (GDP) growth during a fireside chat at the Business Standard BFSI Insight Summit 2023.
Das stated that judging from the momentum of economic activity and early indicators, the second-quarter GDP figure, expected at the end of November, is likely to exceed expectations, surprising observers.
While discussing the global economic landscape, Das acknowledged that evolving geopolitics and its impact on financial markets and global growth present significant challenges. He emphasized that geopolitics now poses the most substantial risk to growth, not only for India but for the world as a whole. Despite these challenges, Das reassured that India is better positioned than many other countries to handle such risky situations.
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Das also touched on India's inclusion in the JP Morgan Bond Index, highlighting that it signifies confidence in India's economy and financial markets. However, he acknowledged that it comes with complexities, as inclusion can lead to inflows and potential outflows of passive funds. He emphasized the RBI's preparedness to handle both scenarios, drawing on past experiences during outflows.
Discussing the financial sector, Das emphasized the health and robustness of the Indian banking sector and non-banking financial companies (NBFCs). He underscored the RBI's focus on monitoring the structure of their balance sheets in line with global complexities.
On the topic of cryptocurrency, Das expressed concerns about its potential impact on financial stability, particularly in emerging market economies. He stressed the importance of managing this risk seriously while supporting innovations in the public interest.