Growth momentum of Indian economy likely to be sustained in FY24: RBI annual report

India's growth momentum is likely to continue in FY24 amid easing of inflationary pressures. This as per the Reserve Bank of India's annual report.

The RBI report however, also points out some downside risks to growth including slowing global growth, geopolitical tensions and volatile global financial markets. "It is important, therefore, to sustain structural reforms to improve India's medium term growth potential", says the report.

RBI expects that the Indian economy recorded a real GDP growth of 7% in 2022-23.

A sustained recovery in discretionary spending along with restoration of consumer confidence, provided an impetus to the growth momentum.

According to the report, the current account deficit (CAD) is anticipated to stay within reasonable bounds thanks to strong services exports and the positive effects of modest import commodities prices.

The central bank also stated that monetary policy is still centred on accommodation removal to maintain target inflation while fostering growth.

“With a stable exchange rate and a normal monsoon — unless an El Nino event strikes — the inflation trajectory is expected to move down over 2023-24, with headline inflation edging down to 5.2 per cent from the average level of 6.7 per cent recorded last year,” the report said.