According to the latest Annual Report of the Reserve Bank of India (RBI), the Indian economy is exhibiting strength and stability with robust macroeconomic fundamentals and financial stability. India has emerged as the fastest growing major economy in the world and a leading contributor to global growth. Inflationary pressures are abating, led by steady core disinflation and deflation in fuel prices. Food inflation, however, remains vulnerable to recurring supply shocks which are preventing a quicker alignment of headline inflation with the target. Fiscal consolidation is progressing along with an improvement in the quality of fiscal spending and adjustment.
The external sector is gaining strength, with the narrowing of the current account deficit (CAD) and foreign exchange reserves rising to an all-time high. The financial sector is sound and vibrant, supporting double digit credit growth, backed by high capital adequacy, solid earnings and improvements in asset quality. The outlook for the Indian economy in 2024-25 is brightening, says the RBI. Headline inflation softened to 5.4 per cent during 2023-24 from 6.7 per cent in the previous year, driven by the fall in core inflation (CPI excluding food and fuel) to 4.3 per cent from 6.1 per cent. India is well placed to step-up its growth trajectory over the next decade in an environment of macroeconomic and financial stability.
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