Reserve Bank of India Forecasts Continued Growth for India in FY 2023-24
- ByStartupStory | May 30, 2023
The Reserve Bank of India has forecasted continuous growth for India in the fiscal year 2023-24. In its recently published annual report, the RBI has emphasized the favorable influence of well-managed macroeconomic policies and reduced commodity prices on the nation’s growth path, while acknowledging the alleviating pressures of inflation.
“On the back of sound macroeconomic policies, softer commodity prices, a robust financial sector, a healthy corporate sector, continued fiscal policy thrust on quality of government expenditure, and new growth opportunities stemming from global realignment of supply chains, India’s growth momentum is likely to be sustained in 2023-24 in an atmosphere of easing inflationary pressures,” said the report.
Despite the positive projection, the report issued a warning regarding potential challenges to India’s growth. It identified concerns such as decelerating global economic expansion, prolonged geopolitical tensions, and the potential for increased volatility in financial markets due to new stress factors within the global financial system as factors that could hinder growth.
The Annual Report of RBI for the fiscal year 2022-23, which is a mandated report from its Central Board of Directors, highlighted that the central bank’s monetary policy continues to prioritize the withdrawal of accommodation in order to gradually align inflation with the target, while simultaneously providing support for growth.
“With a stable exchange rate and a normal monsoon—unless an El Nino event strikes—the inflation trajectory is expected to move down over 2023-24, with headline inflation edging down to 5.2 per cent from the average level of 6.7 per cent recorded last year,” the report said.
Regarding the external sector, the report predicts a manageable current account deficit as a result of strong exports in the services sector and the beneficial effects of lower commodity prices on imports. However, the RBI acknowledges the enduring uncertainties in the global landscape, highlighting the potential volatility of foreign portfolio investment flows.
In terms of digital currency initiatives, the RBI outlines its intentions to extend the existing trials of the central bank digital currency (CBDC). The report specifically mentions expanding the CBDC-Retail pilot program to encompass more locations and involve additional banks.
The annual report of RBI for the fiscal year 2022-23 presents an optimistic outlook on India’s economic prospects in the upcoming fiscal year, underscoring the significance of responsible policies and favorable global circumstances.
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