Economy to grow at 7% this year: RBI

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The Indian economy is projected to grow at 7 per cent in the current financial year, based on sustained strengthening of macroeconomic fundamentals, the Reserve Bank of India (RBI) said in its latest annual report on Thursday.

While the central bank is expecting the inflation to ease further, food inflation remains a concern on supply-side shocks.

The RBI’s balance sheet size surged 11.08 per cent to Rs 70.48 lakh crore (about USD 845 billion) as of March 31, 2024. This was nearly 2.5 times that of Pakistan’s entire GDP of close to USD 340 billion.

The Indian economy, expanded at a robust pace in 2023-24, with real GDP growth growing to 7.6 per cent from 7.0 per cent in the previous year.

The economy showed resilience in FY24 (2023-24 fiscal) despite persistent headwinds. The GDP growth is robust on the back of solid investment demand which is supported by healthy balance sheets of banks and corporates, the government’s focus on capital expenditure and prudent monetary, regulatory and fiscal policies, it said, adding the Indian economy is navigating the drag from an adverse global macroeconomic and financial environment.

Also, MSPs for both kharif and rabi seasons 2023-24 ensured a minimum return of 50 per cent over cost of production for all crops, it said.

Indian economy, the report said, is well-placed to step up growth trajectory over the next decade in an environment of macroeconomic and financial stability.

It further said the external sector’s strength and buffers in the form of foreign exchange reserves will insulate domestic economic activity from global spillovers.

The report, however, added that geopolitical tensions, geoeconomic fragmentation, global financial market volatility, international commodity price movements and erratic weather developments pose downside risks to the growth outlook and upside risks to the inflation outlook. “The real GDP growth for 2024-25 is projected at 7.0 per cent with risks evenly balanced,” it said. On its finances, RBI said its balance sheet in FY23 (April 2022 to March 2023) stood at Rs 63.44 lakh crore. With finances normalised to pre-pandemic level, RBI said its balance sheet increased to 24.1 per cent of India’s GDP at end of March 2024 from 23.5 per cent a year back. The central bank’s income rose 17.04 per cent in FY24 while expenditure reduced by 56.3 per cent.

With inputs from PTI