MUMBAI: Reserve Bank Governor Sanjay Malhotra on Friday said India can certainly achieve over 7 per cent growth rate and the nation should aspire for that.
The Reserve Bank of India (RBI) in its bi-monthly monetary policy has projected 6.7 per cent growth for financial year 2025-26, up from 6.4 per cent estimated for the current fiscal.
“I would like to stick my neck out and say that, certainly India can achieve a 7 per cent and plus growth rate. We should certainly aspire for that,” he said when asked whether there was a possibility of the Indian economy growing at a faster pace.
Commenting on the Budget proposals of Finance Minister Nirmala Sitharaman, he said the income tax relief will not fuel inflation but would support growth.
Sitharaman, announced an increase in the personal income tax threshold to Rs 12 lakh, below which taxpayers owe no tax, up from Rs 7 lakh, as well as a rejig in tax brackets that would help those earning higher than that save up to Rs 1.1 lakh.
The reduction in tax rates will benefit one crore taxpayers.
During the interaction with the media after unveiling the last bi-monthly monetary policy of this fiscal year, he further said that the Union Budget 2025-26 is ‘excellent’ from both growth as well as inflation point of view.
Focus of the Budget on agriculture will help increase production of pulses, oilseeds and others and bring down food inflation.
Earlier in the day, the RBI projected retail inflation at 4.2 per cent for next financial year beginning April, while retaining the forecast for 2024-25 at 4.8 per cent.
Food inflation pressures, in absence of any supply-side shock, should see a significant softening due to good Kharif production, winter-easing in vegetable prices and favourable Rabi crop prospects, he said.
On rupee, the Governor said, the exchange rate policy has remained consistent over the years and the central bank does not target any ‘specific level or band’ of the rupee.
“We should not be looking at day-to-day volatility in rupee”, but focus on long-term exchange rate, he said.
On Thursday, the rupee plunged 16 paise to close at a record low of 87.59 against the American currency.
The rupee has declined about 2 per cent so far this year. It depreciated by 3.2 per cent against the dollar since November 6, 2024, the day US presidential election results were announced, largely mirroring the 2.4 per cent appreciation in the dollar index during the same period.
The forex reserve has seen a decline of USD 45 billion in the last three months partly due to RBI’s intervention in the forex market. The forex kitty stood at USD 675.65 billion as on November 8, 2024.
As on January 31 this year, India’s foreign exchange reserves stood at USD 630.6 billion, up from USD 629.55 billion in the preceding week, providing an import cover of over 10 months. PTI
