In its April Bulletin, the Reserve Bank of India (RBI) on Tuesday stated extreme weather conditions could pose a threat to inflation, compounded by prolonged geopolitical tensions that may keep crude oil prices volatile. March saw a slight dip in retail inflation based on the Consumer Price Index (CPI), down to 4.9 per cent after averaging 5.1 per cent in the previous two months, it added.
The Reserve Bank, which primarily considers CPI in its bi-monthly monetary policy decisions, has maintained the key interest rate at 6.5 per cent since February 2023 due to concerns over inflation. An article on ‘State of the Economy’ published in the Bulletin further said global growth momentum has been sustained in the first quarter of 2024, and the outlook for world trade is turning positive. Treasury yields and mortgage rates are ticking up in major economies as expectations of interest rate cuts are being pared.
“In India, conditions are shaping up for an extension of a trend upshift in real GDP growth, backed by strong investment demand and upbeat business and consumer sentiments,” the article said. The RBI, however, said the views expressed in the Bulletin article are of the authors and do not represent the views of the Reserve Bank of India.
Sustained growth of 7% feasible for India: RBI
Last week, RBI Monetary Policy Committee (MPC) member Shashanka Bhide said that sustaining the economic growth momentum of 7 per cent in 2024-25 and beyond is feasible on the back of favourable monsoon, higher farm productivity and improved global trade. During 2023-24, the economy is likely to record a growth rate of nearly 8 per cent on account of the good performance of the manufacturing and infrastructure sectors.
Recently, the International Monetary Fund (IMF) raised India’s growth projection to 6.8 per cent for 2024 from its January forecast of 6.5 per cent citing bullish domestic demand conditions and a rising working-age population. The Asian Development Bank (ADB) also raised India’s GDP growth forecast for the current fiscal to 7 per cent from 6.7 per cent earlier, saying the robust growth will be driven by public and private sector investment demand and gradual improvement in consumer demand.
(With PTI inputs)
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