Growth momentum to continue: Report

Mumbai, May 30

The RBI on Tuesday said India’s growth momentum is likely to continue in 2023-24 even as it made a case for pushing structural reforms to deal with the geopolitical developments and also to achieve sustained growth in the medium-term.

The Reserve Bank’s annual report flagged slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility as possible downside risks to growth.

The report notes that volatility has ebbed in global financial markets and risks to financial stability from the failure of banks in some advanced economies (AEs) in March 2023 have eased. Resolute policy actions have stemmed the tide of confidence runs for now.

“Amidst strong global headwinds, the Indian economy is expected to have recorded a growth of 7% in real GDP in 2022-23,” it said.

A sustained recovery in discretionary spending, particularly in contact intensive services, restoration of consumer confidence, high festival season spending after two consecutive years of Covid-induced isolation and the government’s thrust on capex provided impetus to the growth momentum.

In the second half of the year, however, the pace of year-on-year growth moderated because of unfavourable base effects, weakening private consumption demand caused by high inflation, slowdown in export growth and sustained input cost pressures, it said.

“On the back of sound macroeconomic policies, softer commodity prices, a robust financial sector, a healthy corporate sector, continued fiscal policy thrust on quality of government expenditure, and new growth opportunities stemming from global realignment of supply chains, India’s growth momentum is likely to be sustained in 2023-24 in an atmosphere of easing inflationary pressures,” the report said.

Slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility following new stress events in the global financial system, however, could pose downside risks to growth. “It is important, therefore, to sustain structural reforms to improve India’s medium-term growth potential,” the report said. — PTI

Currency in circulation up

• The value and volume of banknotes in circulation increased by 7.8% and 4.4%, respectively, during FY23 as compared with 9.9% and 5%, respectively, in FY22
• In value terms, the share of Rs 500 and Rs 2,000 banknotes together accounted for 87.9% of the total value of banknotes in circulation as on March 31, 2023, as compared to 87.1% a year ago