India's GDP Projected To Grow 6.5% In FY24, Domestic Economy Resilient: RBI

India’s GDP growth for 2023-24 is projected at 6.5 per cent amid softer global commodity and food prices, and good rabi crop prospects, among others, according to the RBI’s annual report 2022-23 released on Tuesday. It added that domestic economic activity does face challenges from an uninspiring global outlook going forward, but resilient domestic macroeconomic and financial conditions expected dividends.

“Risks to inflation have moderated with downward corrections in global commodity and food prices and easing of the pass-through from high input cost pressures of last year. The cumulative increase in policy repo rate by 250 bps last year would steer the disinflationary process, along with supply side measures to address transient demand-supply mismatch due to food and energy shocks,” the RBI said in the report.

It said the March 2023 round of the Reserve Bank’s consumer confidence survey reveals that the current situation is perceived by consumers to have improved on account of optimism in the general economic situation and in household ncome. Future expectations also remain positive.

“According to the 101st round of the quarterly industrial outlook survey, manufacturing firms are exuding positive sentiments on production, order books, employment conditions and capacity utilisation for Q2 and Q3 2023-24,” the central bank said.

It also said the realignment of global supply chains, transition to green energy and ongoing technological advancements provide a congenial environment for a pick-up in investment activity and raising productivity. Robust balance sheets of corporates and banks, coupled with high capacity utilisation, would aid in strengthening the momentum in private investment.

Apart from this, port cargo traffic and railway freight traffic movements also point to industrial activity picking up amidst gradual easing of input cost pressures, it added.

“The prospects of the kharif crop would depend on the progress of the rainfall during the SWM (south-west monsoon). As per the India Meteorological Department’s (IMD) forecast, the SWM season rainfall during June-September 2023 is likely to be normal at 96 per cent (+/- 4 per cent) of the long period average (LPA). The actual performance of the SWM rains, however, would depend on the interplay of possible rainfall deficiency due to an El Nino event and the counterbalancing effects of events such as the positive Indian Ocean Dipole,” the RBI said.