Global Slowdowns Could Affect Indian Economic Outlook: RBI In Financial Stability Report

Global Slowdowns Could Affect Indian Economic Outlook: RBI In Financial Stability Report

In its Financial Stability Report published on June 27, 2024, the Reserve Bank of India, underscored the vulnerabilities posed to the Indian economy by external factors.

Juviraj AnchilUpdated: Friday, June 28, 2024, 02:24 PM IST
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While Indian economic prospects look reasonably good and relatively stable as compared to major economies, the RBI looked into factors that could play a pivotal role in placating that phenomenon. In its Financial Stability Report published on June 27, 2024, the Reserve Bank of India, underscored the vulnerabilities posed to the Indian economy by external factors.

According to the central bank, the real GDP grew by 8.2 per cent in 2023–24, which was a jump from 7 per cent form the previous fiscal year. The RBI did, however, highlight the muted private and government consumption.

With regards to the prospects of the country's economic growth in the near future, the ongoing monsoon season also found a mention in the bank's report.

Given the weather system's salience to the economy and the activities in the country, the prediction of an above-normal or normal monsoon is expected to boost the production and consumption prospects of the country.

Given the weather system's salience to the economy and the activities in the country, the prediction of an above-normal or normal monsoon is expected to boost the production and consumption prospects of the country. | Photo credit: Unsplash

Given the weather system's salience to the economy and the activities in the country, the prediction of an above-normal or normal monsoon is expected to boost the production and consumption prospects of the country.

Global Slowdowns And Their Effect

When it came to the macroeconomic risks faced by the country at large, the RBI report placed greater emphasis on the global factors that could induce deviations in the current growth path.

The central bank underscored the pertinence of global instability, which is supplemented by conflicts throughout the globe.

Speaking about the positives, the government's banker said,

Speaking about the positives, the government's banker said, "There are several positives in the near-term economic outlook. First, domestic demand conditions are strengthening, and business optimism is at its highest among major economies in the world." | File/ Representative

Apart from the conflict-oriented issues surrounding the global economy, the report also laid emphasis on the slow growth of the world's economy and how the global slowdown of major economies in Europe and Asia could have an impact on India as well.

Speaking about the positives, the government's banker said, "There are several positives in the near-term economic outlook. First, domestic demand conditions are strengthening, and business optimism is at its highest among major economies in the world."

The report also pointed at advancements in other avenues, including investment in infrastructure and aiding export of services.

Given the weather system's salience to the economy and the activities in the country, the prediction of an above-normal or normal monsoon is expected to boost the production and consumption prospects of the country.

Given the weather system's salience to the economy and the activities in the country, the prediction of an above-normal or normal monsoon is expected to boost the production and consumption prospects of the country. |

Downside Risks To Outlook

Talking about the 'downside', the report once again laid emphasis on global factors, and said, "Downside risks to this outlook stem from global slowdown and spillovers, geopolitical risks and their impact on supply conditions and commodity prices, slack in the rural economy and uncertainties related to weather conditions."

Taking about corporations and their growth, the bank said that there is stability in the sector and that NFCs or non-financial corporations, despite the high interest rate, have managed to strengthen their balance sheet and leverage their position.

In this regard, the bank pointed at the sales growth diverged across manufacturing firms, information technology (IT) firms and non-IT services firms.

India's current interest rate or report rate, stands at 6.50 per cent.

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