India's growth momentum to continue in 2023-24: RBI annual report

The Reserve Bank of India has projected sustained growth for India in the fiscal year 2023-24. In its annual report released today, RBI has highlighted the positive impact of sound macroeconomic policies and softer commodity prices on the country's growth trajectory, while noting the easing inflationary pressures.

"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 optimistic outlook, the report cautioned about potential risks to India's growth. It identified slowing global growth, protracted geopolitical tensions, and a possible upsurge in financial market volatility due to new stress events in the global financial system as downside risks.

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The RBI's Annual Report for 2022-23, a statutory report of its Central Board of Directors, said its monetary policy remains focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting 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.

In the external sector, the report anticipated a moderate current account deficit due to robust services exports and the positive impact of reduced commodity prices for imports. However, the RBI acknowledged the persistence of global uncertainties, noting that foreign portfolio investment flows may remain volatile.

In terms of digital currency initiatives, the RBI outlined its plans to expand the ongoing pilots of the central bank digital currency (CBDC). The report mentioned the expansion of the CBDC-Retail pilot to more locations and the inclusion of additional participating banks.

Overall, the RBI's annual report for 2022-23 has painted a positive picture of India's economic prospects for the coming fiscal year, highlighting the importance of prudent policies and favourable global conditions.