India's growth expected to gain momentum in rest of 2023: RBI Bulletin

23 Oct '23

2 min read

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Insights

India's economic growth is likely to gain momentum during the rest of 2023, especially from the impetus of festival spending, according to the October issue of the RBI Bulletin.
Households are looking through the current inflation spike, awaiting better days three months and a year ahead.
Firms expect moderation in growth of selling prices.

India’s economic growth is expected to gain momentum during the rest of the year, especially from the impetus of festival spending, and with moderating inflation, households are looking through the current inflation spike, awaiting better days three months and a year ahead, according to the October issue of the Reserve Bank of India's (RBI) Bulletin.

While risks are evenly balanced, with weather conditions and volatile global energy and food prices weighing in on the upside, firms across manufacturing and services sectors expect moderation in growth of selling prices, the bulleting noted.

The country’s retail inflation eased to a three-month low of 5.02 per cent in September, but remained above the RBI's medium-term target of 4 per cent.

The central bank’s monetary policy meeting (MPC) met during October 4-6 for its fourth bi-monthly meeting for fiscal 2023-24. It felt the outlook for domestic activity is brightening on account of the sustained buoyancy in services, consumer and business optimism, public spending on infrastructure and the underlying strength of the financial sector’s balance sheet even as corporations deleverage and post strong bottom lines.

On the external front, the current account deficit (CAD) is modest and more than financed, with foreign exchange reserves providing a strong buffer that is insulating the economy from global spillovers as well as from the slowdown in external demand.

High frequency indicators show a broad-based gaining of momentum in August and September. The festival season is all set to light up volumes of e-commerce sales as well, the bulletin noted.

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