India’s real GDP growth in 2023-24 surged to its highest since 2016-17, surpassing expectations
The Indian financial system is stronger than in the past and the country’s economy is an outlier which is growing steadily even as the global financial system is facing strong headwinds, according to RBI Deputy Governor M Rajeshwar Rao.
“If we exclude post-COVID rebound in 2021-22, India’s real GDP growth in 2023-24 surged to its highest since 2016-17, surpassing expectations. The period marked a shift in growth trajectory from an average of 7 percent pre-2020 to an average of 8 percent or higher during the subsequent period, driven largely by domestic factors. Inflation is currently forecast to average around 4.5 percent in 2024-25 and 4.1 percent in 2025-26,” he said in a recent address at the J P Morgan India Leadership Series Lecture.
“These macroeconomic conditions could, therefore, lay the foundation for sustainable future growth, improve consumption conditions, strengthen the investment climate, and enhance external competitiveness,” he added.
He pointed out that the Indian banking sector, in particular, has demonstrated significant improvement in key metrics such as capital adequacy, asset quality, and profitability, supported by robust macroeconomic fundamentals and business confidence. There has been sustained growth in credit expansion, primarily driven by personal loans and loans to the services sector.
The country’s banks have achieved a multi-year low in their gross non-performing assets (GNPA) ratio at 2.8 percent and net non-performing assets (NNPA) ratio at 0.6 percent, underscoring strong performance across various indicators. The profitability of banks also remained strong, evidenced by their Return on Equity (RoE) at 13.3 percent and Return on Assets (RoA) at 13.8 percent as of March 31, 2024.
At an aggregated level, non-banking financial companies (NBFCs) also continue to maintain robust health indicators as of March 2024, with a CRAR of 26.6 percent, GNPA ratio of 4.0 percent, and RoA at 3.3 percent, he said.
Rao also highlighted that India has achieved the highest climate change performance index (CCPI) score among G20 members in 2024, which reflects the country’s unwavering commitment to this cause.
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