The latest Reserve Bank Bulletin has suggested that retail inflation has decreased as a result of monetary policy action and supply side interventions, but cautioned that there is still a long way to go. In addition, the November Bulletin highlighted signs of a global economic slowdown, particularly in manufacturing, while services sector activity appears to have peaked post-pandemic.
The report also pointed out that tightening financial conditions pose a significant risk to the global outlook. The momentum of the change in GDP is expected to be higher in the third quarter of 2023-24, with festival demand remaining strong, according to the article authored by a team led by RBI Deputy Governor Michael Debabrata Patra.
The authors noted that investment demand appears to be resilient due to government infrastructure spending, increased private capex, automation, digitalization, and indigenization. The combination of monetary policy action and supply side interventions has guided inflation down from its high levels earlier in the year, marking a welcome relief.
The RBI, however, clarified that the views expressed in the article are those of the authors and do not necessarily represent the views of the central bank. The article also highlighted India’s viable external sector, modest Current Account Deficit (CAD) financed by capital flows, stable currency, and healthy foreign exchange reserves.
The momentum of growth has pushed GDP well above pre-pandemic levels, making India the fifth largest economy in the world at market exchange rates. It was also noted that the financial sector is exhibiting soundness and supporting the credit needs of a resurgent economy.
This marks the 37th edition of the “State of the Economy” article, which has been revived after a 25-year hiatus. Overall, the report paints a mixed picture of the current state of the Indian economy, highlighting both positive and cautionary developments.
I have over 10 years of experience in the cryptocurrency industry and I have been on the list of the top authors on LinkedIn for the past 5 years. I have a wealth of knowledge to share with my readers, and my goal is to help them navigate the ever-changing world of cryptocurrencies.
