India likely to outpace RBI growth forecasts, says World Bank's Neelkanth Mishra
New Delhi, June 5
India is likely to grow at a faster pace than projected by the Reserve Bank of India, according to Neelkanth Mishra, India's newly appointed Executive Director at the World Bank.
The Reserve Bank of India (RBI) reduced its growth forecast for FY27 to 6.6 per cent from 6.9 per cent earlier in its policy announcement on Friday. Mishra said the RBI's forecast is too conservative, arguing that the underlying economy is performing significantly better than official projections suggest.
Speaking to ANI, the World Bank executive director said internal assessments indicated that the economy grew at nearly 8 per cent during the February-March period.
"I think RBI's forecasts are too conservative," Mishra said. "I think the economy is doing far better than what they're building in. But that's the difference, I guess, when they have to be the official forecaster--they may be slightly more conservative."
Mishra also explained the central bank's decision to maintain a status quo on interest rates and its policy stance, citing the absence of persistent inflationary pressures. He said temporary upward revisions to inflation driven by high oil prices do not warrant a rate hike unless crude oil sustainably breaches the USD 130-per-barrel mark next year.
Mishra described the use of rate hikes to manage panic in the currency market as an inefficient and costly measure that often fails to produce the desired results.
"So without any evidence of sticky inflation, I think it was unwise to raise rates," Mishra said. "Some people in the markets wanted a rate hike to protect the currency from further depreciation. But my advice has consistently been that rate hikes to prevent panic in the currency market are like option 15, not option 1, because they are too costly from a growth perspective. And frankly, they often don't work. So I'm very glad that the RBI has kept rates unchanged."
Mishra noted that it remains premature to anticipate major fiscal adjustments or accurately project nominal GDP growth, as much will depend on GST and corporate tax collections. He added that only two months have passed in the current financial year.
— ANI
Reader Comments
I appreciate Mishra's balanced take on rate hikes. The RBI was right to hold rates—raising them just to prop up the rupee would hurt borrowers and businesses. We need growth, not panic measures. But I wish the government would focus more on job creation than just GDP numbers. 8% growth means little if it doesn't translate to more employment for our youth.
Honestly, I'm tired of experts giving conflicting views. RBI says 6.6%, World Bank guy says 8%. Who do we believe? Ground reality in my small business is that demand is still weak, and input costs are high. Maybe the formal economy is doing well, but the informal sector is struggling. Let's wait and watch—numbers can be massaged. 😅
Interesting perspective from Neelkanth Mishra. As someone who follows global economic trends, I think India is indeed well-positioned compared to many other economies. The digital infrastructure push, PLI schemes, and strong services exports are real positives. However, the RBI's caution is understandable given global inflation risks and volatile commodity prices. I hope the government uses this momentum to push through more reforms.
Great to see an Indian economist at the World Bank talking about our growth potential! His point about rate hikes being costly for growth is spot on. But I wish he'd addressed rural demand and agricultural growth—that's where most Indians live. Urban India may be booming, but our farmers are still facing challenges. Let's hope the optimism translates into real improvements for all sections of society.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.