RBI’s State of the Economy Report – Current Updates (January, 2024)

January 19, 2024

According to RBI’s State of the Economy report, India is poised to sustain 2023’s economic momentum in 2024. But reigning in inflation and boosting rural and consumption growth is vital for truly inclusive expansion per its latest report.

Need to Anchor Inflation Expectations

While economic activity continues strengthening, inflation must align with the 4% target by Q2 2024 to enable sustained 7%+ GDP growth in 2024-25. Anchoring expectations will drive broad-based advancement.

Crowding in Private Investment

Government infrastructure push has started crowding-in private capital expenditure alongside consumption. With investment complementing spending, 2023 ended strongly despite odds.

Asia to Lead Global Growth

The report forecasts emerging economies like India to outperform the world, with Asia leading overall 2024 growth. Global trade is also rebounding from its pandemic slide but may remain below pre-COVID peaks.

Financial Sector Strengthening Required

The analysis stresses further bolstering bank balance sheets, improving asset quality and sustaining external balance gains to secure future opportunities. Managing risks prudently will enable leveraging India’s strengths.

Harnessing Technological Dividends

It advocates harnessing technology-led growth equitably in a calculated risk environment. India must fully capture the productivity potential of digital advances to lift millions.

Rural Recovery Still Nascent

While urban consumption has recovered amid a strong uptick in discretionary spending, rural spending growth remains muted. Further fuel price moderation can accelerate farm mechanization and raise rural purchasing power.

Upskilling Workforce to Attract Investment

With India aiming to expand manufacturing under Make in India for the world, implementing National Skills Qualifications Framework to upskill workforce to global standards will augment competitiveness and draw investors.

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