RBI and Economic Outlook

ECONOMIC Viewpoint –

RBI’s cautious but optimistic outlook is in alignment to aggressive monetary tightening globally to contain multi year high inflation. The 35 bps repo rate hike is a sign of a balanced and accommodative stance to break prolonged sticky core inflation. Other calibrated measures like fiscal interventions along with repo rate hike should be highly considered by RBI to give impetus to the economic growth trajectory as a center of gravity. Today, the macro-economic factors like rebound in urban demand, resilient rural demand, expanding bank credit growth, steady manufacturing, revival in service sector, good output of crops, continual discretionary spendings, investment inflow, enhanced private investment to boost CAPEX cycle is silver lining in the gloomy global economic weather. India’s GDP growth is resilient leaving the worst of inflation behind us. The headline inflation will soften in forthcoming quarters and apex regulatory bodies are conscious of the growth outlook. RBI assures nimble action to arrest faltering economic growth by alternative tools injecting liquidity if required, and also keep a close watch on high currency fluctuation rate to insulate export led growth.

India’s real GDP growth rate stands at 6.3% which is a bright spot amidst looming recessionary threat tempering global economies growth curve.  Going forward, RBI should act prudent with calibrated measures in anchoring inflation targets and foster growth vectors to accomplish the target of $ 5 trillion economy.