Mumbai, Feb 16 (FN Bureau) Even as the global macroeconomic situation remains embroiled in a heightened state of uncertainty, the domestic economic situation continues to improve, making India the fastest growing economy, according to a Reserve Bank of India article on the state of economy. The Union Budget 2022-23 and the monetary policy announcement of February 10, 2022 have set the tone for a durable and broad-based revival, said the article published in the RBI Bulletin February 2022. “Domestic macroeconomic conditions are striking a path that is diverging from global developments. In India, the recovery in economic activity is gaining strength and traction as it emerges from the third wave,” it added.
The article further mentioned that the global economy today stands at an inflection point and inflation has become entrenched across economies, owing to a spike in commodity prices and persistence of supply chain bottlenecks. The global macroeconomic situation remains embroiled in a heightened state of uncertainty, with risks tilted to the downside, the article stated. “Investor sentiment has been dampened by risk aversion, which could unsettle capital flows and impede the embryonic recovery going forward. Notwithstanding this unsettled global environment, the domestic economic situation continues to improve,” it said. The renewed emphasis on public investment through infrastructure development is expected to crowd-in private investment and strengthen job creation and demand in 2022-23.
Further, the fundamental to infrastructure boost is the GatiShakti national master plan, which aims to achieve inclusive growth through multi-modal connectivity and logistics efficiency. Both manufacturing and services remain in expansion with optimism on demand parameters and uptick in consumer and business confidence. As businesses return to a new normal, the job landscape is expected to improve. Farm sector conditions remain robust albeit with some signs of rural demand slackening, it noted. With inflation projected to stay within the tolerance band in 2022-23, the Monetary Policy Committee (MPC) decided to pause and persevere with an accommodative policy stance. “Higher spending and ease of doing business have brightened the outlook. India has once again emerged as the fastest growing economy among the major economies of the world, according to the International Monetary Fund (IMF),” it said.