RBI says India’s growth momentum to continue

The Reserve Bank on Tuesday said that India’s growth momentum is likely to continue in 2023-24 even as it made a case for pushing structural reforms to deal with the geopolitical developments and also to achieve sustained growth in the medium-term. The Reserve Bank’s annual report flagged slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility as possible downside risks to growth. The report notes that volatility has ebbed in global financial markets and risks to financial stability from the failure of banks in some advanced economies (AEs) in March 2023 have eased. Resolute policy actions have stemmed the tide of confidence runs for now. “Amidst strong global headwinds, the Indian economy is expected to have recorded a growth of 7.0 per cent in real GDP in 2022-23,” it said. A sustained recovery in discretionary spending, particularly in contact intensive services, restoration of consumer confidence, high festival season spending after two consecutive years of COVID-19 induced isolation and the government’s thrust on capex provided impetus to the growth momentum. In the second half of the year, however, the pace of year-on-year growth moderated because of unfavourable base effects, weakening private consumption demand caused by high inflation, slowdown in export growth and sustained input cost pressures, it said.