Not out of the woods yet, have miles to go, says RBI

Sandeep Dikshit

New Delhi, November 16

The Indian economy is “not out of the woods yet and we have miles to go”, but inflation of around 5% and 4.9% in September and October, respectively, is a “welcome relief” from the average of 6.7% in 2022-23 and 7.1% in July-August 2023, said the RBI’s monthly bulletin for November released today.

India’s external sector has remained viable, with a modest current account deficit (CAD) financed by resilient capital flows, one of the least volatile currencies in the world and a healthy level of foreign exchange reserves. The momentum of growth has picked up, taking GDP well above pre-pandemic levels to becoming the fifth largest economy in the world at market exchange rates, noted an exhaustive review of the Indian economy.

Welcome relief

We are not out of the woods yet and have miles to go, but readings of around 5% and 4.9% in September and October, respectively, are a welcome relief from the average of 6.7% in 2022-23 and 7.1% in July-August 2023. —RBI bulletin

The review said the RBI decided against many odds that it would try to “infuse the light and hope of facts into our readership through difficult challenges that confronted the Indian economy on this journey.”

“Festival demand is ebullient. In urban areas, consumer appliances are in strong demand, especially in the mid and premium segments. Consumer sentiment is upbeat. Close to 80% of purchases of consumer durables are reported to be through consumer financing schemes spiced up with attractive EMI offers.

“In the affordable housing space, sales have declined, deterred by high interest rates, but surging growth is taking hold for houses in the Rs 1-2 crore and Rs 50 lakh-Rs 1 crore segments. Festival spending and consumer exuberance are also driving record loan disbursements by non-banking financial companies (NBFCs). Nearly half of the credit demand is originating from tier 3 cities,” it noted.