India's growth momentum is likely to continue in fiscal 2023-24 (FY24) in an environment of easing inflationary concerns amid sound macroeconomic policies, softer commodity prices, a healthy corporate sector, maintained fiscal policy thrust on the quality of spending by the government and new growth opportunities stemming from global realignment of supply chains, according to the central bank's (RBI) annual report released recently.
Slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility following new stress events in the global financial system could pose downside risks to growth, it said.
RBI’s monetary policy is focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth, the document said.
''With a stable exchange rate and a normal monsoon—unless an El Nino event strikes—the inflation trajectory is expected to move down over 2023-24, with headline inflation edging down to 5.2 per cent from the average level of 6.7 per cent recorded last year,'' the report said.
The current account deficit is expected to remain moderate, drawing strength from robust services exports and the salubrious impact of moderation in commodity prices of imports.
''With global uncertainties persisting, foreign portfolio investment (FPI) flows may remain volatile,'' RBI said.
The central bank aims at expanding the ongoing pilots in the central bank digital currency both in retail and wholesale during this fiscal by incorporating various use cases and features, the annual report added.