“ In line with the wider expectations, the MPC has maintained the status quo in both the policy rates and the stance of “ withdrawal of accommodation”. Though the CPI is pegged at 5.4% for FY’24, the expectation of inflation at 4.5% for FY’25 comes from the complete transmission of the 250 bps hikes so far, percolating fully into the economy.
The central bank has shown its nimbleness and readiness to tackle the surplus liquidity and reach the long-term objective of inflation at 4% levels on a durable basis. GDP growth is estimated at 7.3% for FY’24 – making it the third consecutive year of > 7% growth. Food remains the major risk element. Next year’s projection of 7% growth also shows the robust growth potential in India, driven by growing physical infrastructure, continued digitization and rising capex besides a steady urban consumption.
Fiscal consolidation cues in the Budget and the financial stability of the economy as seen by external and internal indicators are signs that the central bank may much comfort in. The overall domestic economic outlook exudes immense optimism as India continues to remain the bright spot in the world. ”