RBI governor: We will become a new driver of the world economy

Emerging and developing countries, known as the global South, “will contribute to and play an important role in overall global growth,” Reserve Bank of India Governor Das said in an interview in Tokyo, laying out the outlook. “Compared to other regions, India is less exposed to external factors,” he said, noting that India “can achieve” its goal of becoming a developed country by 2047.

Shaktikanta Das, governor of the Reserve Bank of India (RBI), in an interview with Nikkei on November 9 (Chinese version: The emerging and developing world, known as the globalSouth, “will contribute to and play an important role in overall global growth,” Nikkei said in an interview. Against the backdrop of a growing slowdown in the Chinese economy, Das expressed confidence that “India will become the new driving force of the world economy.”

“The uncertain geopolitical environment is a global issue,” Das said in an interview in Tokyo, considering the situation in Ukraine and the Middle East. On this basis, it said: “India is less exposed to external factors than other regions.” “Most of India’s growth comes from domestic demand,” he said, citing the fact that it is not easily affected by external demand trends.

In August 2022, Prime Minister Narendra Modi vowed to make India a developed country by 2047, the 100th anniversary of its independence. The Reserve Bank of India estimates that annual economic growth of 7.6 per cent is needed to achieve this target.

India has the world’s largest population of 1.4 billion and a per capita gross domestic product of about $2,000, which is still dwarfed by developed countries. Income levels are also low, currently classified as “low – and middle-income countries” according to the World Bank’s definition.

The RBI has forecast growth of 6.5 per cent in 2023, but Mr Das stressed that “India has the potential to grow by more than 7 per cent”. The target set by the Modi government is clearly “achievable”.

As a basis for maintaining high growth, Das cited “strong economic fundamentals (underlying conditions) and a large young population compared to other countries.” Unlike China, which entered a shrinking population situation, India is expected to maintain population growth until the 2060s. With the expansion of the middle class, the demand for durable consumer goods will continue to increase.

According to the International Monetary Fund (IMF), India will overtake Japan and Germany in 2026 and 2027 respectively to become the third largest country in the world in terms of GDP. “Given the growth in recent years, this is likely to happen,” Mr Das said.

India will hold the rotating presidency of the Group of Twenty (G20) in 2023. Mr Modi presents himself as the face of the global South. As results of the presidency, Das cited the African Union’s (AU) accession to the G20, among others.

The US and Europe have imposed sanctions on Russia over the situation in Ukraine, while India has kept its distance. India has avoided direct criticism of traditionally friendly relations with Russia and has increased its purchases of Russian crude oil. Regarding these moves by India, Das said that “every country will make decisions in the best interest”.

The Reserve Bank of India introduced an international settlement mechanism using the rupee in July 2022. Regarding the internationalization of the rupee, Das said that “there is no intention to increase transactions with specific countries (such as Russia),” while explaining that “as India grows, the global presence of rupee clearing will inevitably increase.”