Unlike global economy, India will not slow down: RBI

Unlike the global economy, India would not slow down – it would maintain the pace of expansion achieved in 2022-23, the Reserve Bank of India (RBI) said on Tuesday.
RBI Governor Shaktikanta Das. (Photo | PTI)
RBI Governor Shaktikanta Das. (Photo | PTI)
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NEW DELHI: Unlike the global economy, India would not slow down -- it would maintain the pace of expansion achieved in 2022-23, the Reserve Bank of India (RBI) said on Tuesday. In its monthly bulletin, the apex bank said it remains optimistic about the country, whatever the odds.

“Even as global growth is set to slow down or even enter a recession in 2023 as global financial markets wager, India has emerged from the pandemic years stronger than initially thought, with a steady gathering of momentum since the second quarter of the current financial year,” RBI said.

On the supply side, agriculture is into a seasonal uptick, industry is emerging out of contraction and services have maintained momentum, it added. Consumer price inflation remains high and core inflation continues to defy the distinct softening of input costs, it added. “Over the financial year ahead (2023- 24), inflation is expected to range tightly between 5% and 5.6% if India survives an El Nino event adversely affecting the south west monsoon, given global uncertainties.”

According to the report, collapse of two banks in the US -- Silicon Valley Bank (SVB)and the Signature Bank -- in the first half of March 2023 are rippling through the global financial markets. While the direct impact of this meltdown on economic activity could be limited as it would appear at present, markets are bracing for tighter financial conditions, which could present a trade-off between financial stability concerns and the conduct of disinflationary monetary policy.

In the foreign exchange market, Indian rupee (INR) depreciated vis-à-vis the US dollar by 0.5% in February 2023. “The performance of the rupee was in line with many other EMEs and reserve currencies. Volatility in the movement of rupee, as measured by the coefficient of variation was, however, lower than that of other currencies, except the Turkish lira in February. In terms of the 40-currency real effective exchange rate (REER), the INR depreciated by 0.5% in February 2023 (m-o-m)” it added.

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