India’s economy hit a speed bump, with GDP growth slowing to a 15-month low of 6.7% in the April-June quarter, falling short of the Reserve Bank of India’s (RBI) projection of 7.1%.
According to RBI Governor Shaktikanta Das, this dip stems from two critical factors: reduced government spending and sluggish agricultural performance.
Speaking at a national conference of chartered accountants, Governor Das explained that government expenditure, both at the central and state levels, declined during the first quarter.
The enforcement of the model code of conduct during the recent Lok Sabha elections contributed to this reduction.
Das expressed optimism that government spending would pick up in the coming quarters, providing the necessary support for growth.
The agriculture sector also faced challenges, recording a minimal 2% growth. Despite a favorable monsoon overall, some regions did not benefit equally.
However, there’s a positive outlook that the agriculture sector will recover in the upcoming months.
Das remains confident that the RBI’s annual growth projection of 7.2% is still achievable, anticipating stronger performance as these temporary setbacks are addressed.
He also highlighted major reforms, such as the introduction of GST, the inflation-targeting framework, and the Insolvency & Bankruptcy Code (IBC), as significant steps forward for the Indian economy.
The RBI’s primary role is to maintain price stability while supporting growth, a balance that has been particularly crucial during recent challenges, he noted.
Reflecting on recent economic disruptions, including the COVID-19 pandemic and global events like the Ukraine conflict, Das emphasized the RBI’s quick action in adjusting interest rates to control inflation and stabilize the economy.
In closing, Das advised chartered accountants to approach their audits with the same care and thoroughness as a doctor diagnosing a patient, underscoring the importance of accuracy in evaluating a company’s financial health.
This attention to detail is vital in maintaining the trust and stability necessary for a thriving business environment.
India’s growth story, while facing challenges, is poised for recovery as these obstacles are navigated.
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