Governor of the Reserve Bank of India Shaktikanta Das stated on Saturday that the country’s growth in the first quarter of current fiscal year was less than anticipated because the general elections caused a decline in government expenditure and a downturn in the agriculture sector.
India’s gross domestic product (GDP) growth was 6.7 per cent in April-June as compared to 8.2 per cent during the corresponding period of last fiscal. The first quarter growth was also lower than the RBI’s projection of 7.1 per cent.
Talking to mediapersons here, Das said, “Two aspects that have pulled the growth slightly down are slow growth in the agriculture sector and lower spending in the government sectors. The expenditure by both the Centre and the state governments dropped in the wake of enforcement of model code of conduct due to the election season between April and June,” he said.
The RBI governor, however, said other components and main drivers of the GDP growth like consumption, investment, manufacturing, services and construction sectors have registered a growth of more than seven per cent.
The GDP growth in the first quarter of 2024-25 was the lowest in 15 months. The previous low was 6.2 per cent during January-March 2023.
“Agriculture sector recorded a marginal growth rate of around two per cent in the April-June period. Since the monsoon has been very good and spread all over the country except a few areas, the crop sowing outlook is very optimistic. Under these circumstances, we are reasonably confident to achieve the projected annual growth rate of 7.2 per cent,” he said. Das also said commercial banks and non-banking financial companies cannot remove their auditors without prior approval of the RBI. The approval has been made mandatory to ensure that auditors are not working under any pressure, he said.
On a question whether there would be a cut in the interest, Das said, the monetary policy committee would take a call on this. “However, we are more focused on keeping the inflation rate at four per cent and maintaining the stability which will be ultimately helpful for the economic growth of the country,” he said.
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