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MUMBAI : The Reserve Bank of India is optimistic about India’s growth outlook, “whatever the odds", and expects it to maintain the pace seen in the current fiscal year.

“Unlike the global economy, India would not slow down – it would maintain the pace of expansion achieved in 2022-23," RBI staff wrote in the March bulletin of the State of the Economy, published on Tuesday. “We remain optimistic about India, whatever the odds."

Forecasts of India’s real GDP growth for 2023-24, including those by the RBI, stand at between 6.0 and 6.5%.

“India’s real GDP can go up from 159.7 trillion in 2022-23 to not just 169.7 trillion in 2023-24 as is currently being projected but to 170.9 trillion. This is simple arithmetic; hardly a hurray at half-time," the bulletin said.

A real GDP of 170.9 trillion in 2023-24 would mean a growth rate of 7% from 159.7 trillion in 2022-23. RBI has pegged FY24 GDP growth forecast at 6.4%.

This could happen if additional spending by households goes up next year following the 35,000 crore tax relief announced by the 2023-24 Budget and the possibility of a third of the 3.2-trillion increase in effective capital expenditure leading to an increase in effective capital expenditure, boosting gross fixed capital formation.

According to the bulletin, the October-December GDP data which pegged GDP at 4.4% indicates that the “Indian economy is intrinsically better positioned than many parts of the world to head into a challenging year ahead."

RBI also said markets are bracing for tighter financial conditions.

“Yield curves are in deep inversion and the future looks darker than it did just a few weeks ago in early February," it said.

According to the bulletin, India has emerged from the pandemic years stronger than initially thought with agriculture seeing a seasonal uptick, industry emerging out of contraction and services maintaining momentum. However concerns remain over consumer price inflation remaining high and core inflation continuing to defy the distinct softening of input costs.

ABOUT THE AUTHOR
Gopika Gopakumar
Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
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Updated: 21 Mar 2023, 11:51 PM IST
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