India can sustain 8% growth, even higher: RBI bulletin

Food price pressures deter swifter fall in inflation towards 4% target

India can sustain 8 per cent annual GDP growth and the conducive macroeconomic configuration may become a launching pad for a step-up in the country's growth trajectory, said an article on the 'State of Economy' in the central bank's March Bulletin published on Tuesday.

Over the period 2021-24, gross domestic product (GDP) growth has averaged above 8 per cent.

The global economy is losing steam, with growth slowing in some of the most resilient economies and high frequency indicators, pointing to further levelling in the period ahead, said the article authored by a team led by RBI Deputy Governor Michael Debabrata Patra.

In India, real GDP growth was at a six-quarter high in the October-December period of 2023-24, powered by strong momentum, robust indirect taxes, and lower subsidies.

The high visibility of structural demand and healthier corporate and bank balance sheets will likely be the galvanising forces for growth going forward.

"The world is confronted with large shifts in structure and sentiments, which are either underway or impending," it said.

Food price pressures is an obstacle in swifter fall in retail inflation to the Reserve Bank's target of 4 per cent, said in the central bank's March Bulletin published on Tuesday. Retail inflation based on CPI is on a decline since December and was at 5.09% in February.

"Even as inflation is on the ebb with broad-based softening of core inflation, the repetitive incidence of short amplitude food price pressures deters a swifter fall in headline inflation towards the target of 4 per cent," said the article authored by a team lead by RBI Deputy Governor Michael Debabrata Patra.