India's growth momentum to continue in FY24, says RBI report: Key highlights

On the back of sound macroeconomic policies and softer commodity prices, India's growth momentum is likely to be sustained in 2023-24 in an atmosphere of easing inflationary pressures, said the Reserve Bank's annual report released on Tuesday. It, however, added that slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility following new stress events in the global financial system could pose downside risks to growth. "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," it said.

Here are the key highlights from the RBI's Annual Report:

• Amidst strong global headwinds, the Indian economy is expected to have recorded a growth of 7.0 per cent in real GDP in 2022-23
• Agriculture and allied activities were resilient in 2022-23, with gross value added (GVA) registering a growth of 3.3 per cent 
• Uneven spatial and temporal distribution of the southwest monsoon (SWM) led to a marginal decline in kharif foodgrains production
• The production of kharif oilseeds, sugarcane and cotton was higher during the year
• Rabi acreage expanded during the year for most crops and the prospects of rabi crop production, both foodgrains and oilseeds, remain promising, notwithstanding some damage due to unseasonal rains in some parts of the country in March 2023
• In the industrial sector, manufacturing activity withstood global spillovers, while electricity generation exhibited robust growth
• When inflation surged as a consequence of the war in Ukraine, the Monetary Policy Committee (MPC) accorded priority to price stability in the conduct of monetary policy
• As inflation spiked to 7.0 per cent in March 2022 and the MPC sensed that the near-term inflation outlook would deteriorate sharply amidst geopolitical tensions, it raised the policy repo rate by 40 bps to 4.40 per cent in an off-cycle meeting held in May 2022
• The Reserve Bank adopted a nuanced nimble footed approach to liquidity management in sync with the change in the stance of monetary policy or gradual reduction in the size of surplus liquidity in the system
• Global growth is expected to slow down in 2023 and may remain subdued in the medium run
• Globally, disinflation efforts are expected to take down headline inflation from 7.3 per cent to 4.7 per cent in 2023 among AEs, and from 9.8 per cent to 8.6 per cent among emerging market and developing economies (EMDEs)
• With policy tightening by global central banks having moderated, the US dollar is likely to depreciate, easing pressures on currencies of other AEs and EMEs even as the outlook for capital flows to EMEs remains uncertain