RBI's Annual Report: India's Growth Momentum Likely To Be Sustained In 2023-24

The RBI said that inflation trajectory expected to move down to 5.2 per cent this fiscal from the average level of 6.7 per cent recorded last year

Monetary policy remains focused on accommodation withdrawal to ensure inflation aligns with target, while supporting growth, according to the RBI.

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The Reserve Bank of India's (RBI's) annual report on Tuesday said that India's growth momentum is likely to be sustained in 2023-24 in an atmosphere of easing inflationary pressures on the back of sound macroeconomic policies and softer commodity prices. The central bank, however, mentioned 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.

The annual report, a statutory report of its Central Board of Directors, said, "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."

Inflation trajectory expected to move down to 5.2 per cent this fiscal from the average level of 6.7 per cent recorded last year, the RBI said, while adding that the monetary policy remains focused on accommodation withdrawal to ensure inflation aligns with target, while supporting growth.

The annual report for 2022-23 also added 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 banking regulator said.

The 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 during the current fiscal year.  The pilot in CBDC-Retail is proposed to be expanded to more locations and to include more participating banks, the report pointed out.