India’s growth momentum likely to be sustained in 2023-24, says RBI

On the back of sound macroeconomic policies and softer commodity prices, India’s growth momentum is likely to be sustained in 2023-24 in an atmosphere of easing inflationary pressures, said the Reserve Bank‘s annual report released on Tuesday. It, however, added that slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility following new stress events in the global financial system could pose downside risks to growth.

“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,” it said.

The RBI’s Annual Report for 2022-23, a statutory report of its Central Board of Directors, further 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, it said the current account deficit (CAD) is expected to remain moderate, drawing strength from robust services exports and the salubrious impact of moderation in commodity prices of imports. “With global uncertainties persisting, foreign portfolio investment (FPI) flows may remain volatile,” the RBI said.

During the current fiscal, the Reserve Bank of India (RBI) said it aims at expanding the ongoing pilots in the CBDC (central bank digital currency) -Retail and CBDC-Wholesale by incorporating various use cases and features. The pilot in CBDC-Retail is proposed to be expanded to more locations and to include more participating banks, it added.