In its annual report released on Tuesday, the RBI said that despite the challenging global economic environment, India has demonstrated macroeconomic and financial stability with a steady increase in the pace of growth. It said real GDP growth for FY24 is likely at 6.5% with risks evenly balanced. Growth forecast takes into account, soft global commodity and food prices, good rabi Crop prospects, boom in connectivity intensive services and government’s thrust on capital expenditure.
The report noted that even as the global economic outlook looks favorable on the lagged effect of tight monetary policy, India has consistently been one of the world’s fastest growing major economies, posting an average global growth of over 12% over the past five years. Contributed to.
The reduction in inflation has been attributed to the combined efforts of monetary policy actions and effective supply management. “Fiscal consolidation has also played a role in reducing debt and deficit levels, which had escalated due to the pandemic. The current account deficit has remained within sustainable levels. These factors contributed to the entry of macroeconomic stability in the country is,” RBI said. It expects sustained government capital expenditure in recent years to encourage higher private investment in FY24.
“In the external sector, the current account deficit is expected to moderate, buoyed by strength from stronger services exports and softening commodity prices of imports,” the RBI said. It also cautioned that foreign portfolio investment (FPI) flows may remain volatile as global uncertainties persist. “Construction activity is likely to retain traction, as reflected by continued expansion in its near-term indicators: steel consumption and cement production,” the report said.