RBI Bulletin: From GDP growth to inflation - here are five key highlights

The Reserve Bank of India (RBI), on Tuesday, released its monthly bulletin for March 2024 which highlighted India's GDP growth - state of the economy, pandemic-induced Policy Stimulus and Inflation and seasonality in key economic indicators.

The central bank said in its monthly bulletin that the pace of global economic growth is waning, as even the most resilient economies experience a slowdown, and high-frequency indicators suggest a continued flattening in the foreseeable future.

Also read: India's real GDP growth at 6-quarter high in Q3FY24 driven by indirect taxes, lower subsidies: RBI

“In India, real GDP growth was at a six-quarter high in Q3:2023-24, powered by strong momentum, robust indirect taxes, and lower subsidies. The high visibility of structural demand and healthier corporate and bank balance sheets will likely be the galvanising forces for growth going forward. Even as inflation is on the ebb with broad-based softening of core inflation, the repetitive incidence of short amplitude food price pressures deters a swifter fall in headline inflation towards the target of 4 per cent,” RBI said.

Here are five key highlights from RBI's monthly bulletin for March 2024 -

• In Q3 of 2023-24, India experienced a notable surge in real GDP growth, reaching its highest point in six quarters. This upswing was fueled by strong momentum, robust indirect taxes, and reduced subsidies. Looking ahead, the sustained growth trajectory is expected to be driven by the prominent presence of structural demand and the improved health of corporate and bank balance sheets, acting as catalysts for further economic expansion.
• In India, a statistically insignificant coefficient indicates that post-pandemic fiscal support did not correlate with increased inflation. During the initial phases of the pandemic, fiscal policy in India prioritized social protection and healthcare for vulnerable groups, later supplemented by additional public investment and sector-specific support schemes.
• Data indicates that economies with more extensive fiscal expansion tended to exhibit increased inflation in the post-pandemic era, as evidenced by the direction and significance of coefficients derived from panel regression analysis. Conversely, countries that provided moderate fiscal support generally saw more restrained inflation outcomes.
• The COVID-led economic disruptions added extremely high volatility in macro financial data, necessitating revisiting of the seasonal adjustment approach.
• In contrast to the pre-COVID era, there has been a noticeable rise in seasonal fluctuations for cash in hand, balances with RBI, production of primary and consumer goods, textiles, petroleum products, electricity generation, passenger vehicle sales, and merchandise exports.