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Amidst fears of the global economies heading into recession, the Reserve Bank of India (RBI) is hopeful that Indian economy remains resilient and is on course to becoming fastest growing economy in the world.

In spite of geopolitical spillovers, "There are sparks in the wind that ignite the innate strength of the economy and set it on course to becoming the fastest growing economy in the world, though besieged it might be by fears of recession," RBI's monthly bulletin stated.

According to the note, the Indian economy has been showing signs of resilience  and dynamism despite weak global cues and high-risk aversion in financial markets that is stampeding portfolio investors. It is taking down all currencies against the unrelenting strength of the US dollar, RBI stated.

Agriculture sector has seeing good signs on the back of revival of the southwest monsoon and rejuvenation of sowing activity, raising expectations that rural demand will soon catch up with urban spending and consolidate the recovery, it added. This respite has been clubbed with domestic inflation easing its recent peak.

The provisional data released by the National Statistical Office (NSO) on July 12 showed that retail inflation eased marginally in June to 7.01 per cent.

The worst of the recent surge in inflation will be left behind if the price moderation witnessed in recent weeks endures alongside the easing of supply chain pressures, thereby enabling the Indian economy to escape the global inflation trap, it added.

On the other hand, it called for close and continuous monitoring of the widening trade deficit and capital outflows. India's forex reserves have declined by USD around 40 billion in 2022. Besides, foreign portfolio investors were net sellers in the Indian equity market for the ninth consecutive month in June. 

Russia-Ukraine war has led to signs of distress across Europe with many countries battling high inflation with food banks in Italy are feeding more people and Germany is mulling to ration natural gas and restart coal plants.

A giant utility is asking for a taxpayer bailout, and more may be coming. Dairies wonder how they will pasteurize milk. The euro has sagged to a 20-year low against the dollar, and recession predictions are on the rise.

(With ANI Inputs)

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