Cautious on GDP outlook: RBI MPC member

RBI MPC member Jayanth R Varma on Tuesday said that he is ‘little more’ optimistic about India’s economic growth than a few months ago, though concerns remain as the country is now ‘disproportionately’ dependent on household spending with other components of demand encountering headwinds.

Varma further said that India should be willing to accept inflation between 4 per cent and 5 per cent for several quarters as the price of avoiding a growth shock. “I am a little more optimistic about growth than I was 2-4 months ago. My cautious optimism stems from improved consumer confidence and various indicators that point to the continuation of the growth momentum,” he said in an interview.

While keeping the global growth projection for FY24 unchanged at 3 per cent, the International Monetary Fund (IMF) recently revised its growth projection for India upwards by 20 basis points to 6.3 per cent in October.

“However, the outlook remains fragile because demand is now disproportionately dependent on household spending with other components of demand encountering headwinds,” the eminent economist emphasised.