Global investors, Central Bank heads, regulators express confidence in India’s growth story: RBI Governor

Chennai, Dec 8 (IANS) Global investors and Governors of various central banks and other regulators are showing greater confidence in the potential of Indian economic growth and the country’s capacity to grow, said Shaktikanta Das, Governor, Reserve Bank of India (RBI).

Answering a question after announcing the decision of RBI’s Monetary Policy Committee (MPC) to hold the repo rate at 6.5 per cent Das said that based on the interactions with the Governors of other central banks, regulators and investors, there is a growing confidence in the potential of the Indian economy.

It also gives the investors confidence to invest and a greater trust on the quality of India’s merchandise and services exports, Das said.

Earlier announcing the MPC’s decision, Das said the global economy is showing signs of slowdown, though unevenly across geographies and sectors.

“The Emerging Market Economies (EMEs) as a group have remained resilient during the current bout of volatility, unlike previous episodes. While headline inflation has receded from the highs of last year, it remains above target in many countries,” Das said.

Core inflation continues to be sticky, impeding the last mile of disinflation. Major central banks have kept rates on hold while refraining from forward guidance in view of the prevailing uncertainties. Financial markets remain volatile in their quest for definitive signals about the future path of interest rates.

“Against this unsettled global economic backdrop, the Indian economy presents a picture of resilience and momentum. The global economy continues to remain fragile. World trade is decelerating amidst a global tide of protectionism. Despite significant restoration of global supply chains, factors like elevated debt levels, lingering geopolitical hostilities and extreme weather conditions aggravate the risks to global growth and inflation outlook,” the RBI Governor said.

According to him, the Indian rupee has exhibited low volatility compared to its EME peers in the calendar year 2023, despite elevated US treasury yields and a stronger US dollar.

The relative stability of the Indian rupee reflects the improving macroeconomic fundamentals of the Indian economy and its resilience in the face of formidable global tsunamis, Das said.

In October 2023, both merchandise exports and imports came back into the expansionary zone. Services exports remained buoyant during Q2:2023-24.

On the financing side, foreign portfolio investment (FPI) flows have seen a significant turnaround in 2023-24 with net FPI inflows of $24.9 billion (up to December 6) as against net outflows in the preceding two years, he said.

According to Das, the net foreign direct investment (FDI), on the other hand, moderated to US$ 10.4 billion in April-October 2023 from $20.8 billion a year ago. Net inflows under external commercial borrowings (ECBs) and non-resident deposit accounts are much higher than last year.

India’s external vulnerability indicators exhibit higher resilience in comparison with EME peers as well as since the taper tantrum period. India’s foreign exchange reserves stood at $604 billion as on December 1, 2023.

–IANS

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