RBI bulletin forecasts continued growth momentum for Indian economy

According to the central bank’s State of the Indian Economy report, the possibility of the global economy showing stronger-than-expected growth in 2024 has brightened in recent months, with balanced chances.

Overview of Economic Performance:

The Reserve Bank of India’s (RBI) monthly bulletin indicates that the Indian economy is poised to maintain its growth trajectory from the first half of the current financial year into the second half. 

Citing robust high-frequency indicators, the bulletin underscores the sustained momentum in economic activity. Notably, expectations of increased capital expenditure by the corporate sector are anticipated to drive the next phase of growth.

State of the Economy Article Insights:

Released on February 20, the central bank’s monthly State of the Economy article, co-authored by Deputy Governor Michael Patra, highlights the positive outlook for India’s economic growth. 

It emphasizes the buoyancy observed in various economic indicators, signaling a continuation of the growth trajectory established in the initial months of 2023-24. It’s important to note that the views expressed in the article do not represent the official stance of the RBI.

Upcoming GDP Data Release:

The observations in the State of the Economy article precede the imminent release of GDP data for the October-December 2023 period, scheduled for February 29 by the statistics ministry. 

While the RBI’s official forecast anticipates a slight moderation in GDP growth to 6.5 percent for the last quarter of 2023, the central bank’s ‘nowcast’ suggests a growth rate of 7 percent for the same period. 

Real GDP expansion of 7 percent in the fourth quarter would be necessary to realize the annual estimate of 7.3 percent growth for the fiscal year.

Anticipated Economic Releases:

Alongside the GDP data for October-December 2023, the statistics ministry will also unveil the second advance estimate of growth for the fiscal year 2023-24. 

The initial advance estimate of 7.3 percent growth, released in January, exceeded the projections of economists, indicating robust economic performance. 

These forthcoming releases will provide further insights into the trajectory of India’s economic growth and prospects for the remainder of the financial year.