Mumbai: India’s pace of economic expansion in FY24 could be close to 8%, likely topping earlier official estimates, said central bank governor Shaktikanta Das.
Pointing to the latest high-frequency indicators of growth, Das said, “Now that we have numbers for three quarters… Our sense and understanding of …the momentum of economic activity tell us this 5.9% growth in the fourth quarter could be exceeded.”
He also spoke about the recent Reserve Bank of India (RBI) action in the payments sector, challenging what he termed “a narrative building up” that the regulator had taken measures against fintech companies. Das said RBI’s action was against a regulated entity – Paytm Payments Bank. “Fintech companies are not regulated by RBI unless they are NBFCs,” he said.
‘Capacity Utilisation Very High’
Higher-than-expected growth in the final quarter of the fiscal, the RBI governor said, would automatically lead to faster-than-anticipated expansion for the full fiscal year. “And when that happens, obviously the growth will be more than 7.6%,” Das said in an interview with ETNow on Wednesday. “I think there is quite a good chance of the GDP growth number for the current year being very close to 8%.”
The National Statistical Office (NSO) estimates India’s GDP growth at 7.6% in 2023-24. Data published last month showed that the pace of expansion in October-December was 8.4%, versus 7.6% in the previous quarter – far higher than market expectations of around 6.6%.
Das also stuck to the RBI’s GDP growth forecast of 7% for the next financial year even as other forecasters, including international agencies, anticipate more moderate growth.
Referring to a meeting held on Tuesday with various all-India industry and trade bodies, Das said their internal surveys showed that capacity utilisation was “very high,” and there were expectations of private investment picking up, while demand for bank credit remains high.
Paytm Action
Das said he did not foresee problems with the Paytm Payments Bank operational deadline of March 15, beyond which no further deposits, credit transactions and top-ups will be allowed in any customer accounts, prepaid instruments, wallets, FASTags or National Common Mobility Cards.
“About 80-85% of customers using the Paytm payment app will not be impacted at all because their app is also linked to another bank account. The challenge pertains to those 15-20% of the users who have linkage only with a bank account in the Paytm Payments Bank,” he said.
Other banks are proactively onboarding customers and the National Payments Corporation of India (NPCI) has been working closely with them to keep disruption to a minimum, he said.
The national payments body has been advised by RBI to do due diligence before taking a decision on Paytm becoming a third-party application provider, said the governor.
