MUMBAI - India's economy is gathering steady pace and is unlikely to face major repercussions from the recent global financial turmoil, the Reserve Bank of India said in its bulletin released on Tuesday.
"Unlike the global economy, India would not slow down – it would maintain the pace of expansion achieved in 2022-23," the RBI said in its State of the Economy article in the bulletin.
"We remain optimistic about India," it added
The central bank's nowcast of real GDP growth for the fourth quarter of the current 2022/23 year stands at 5.3%, it said.
India's economy grew by 4.4% in the third quarter and is expected to expand by 7% for the fiscal year ending March after recording growth of 9.1% in 2021/22.
RBI said, while the direct impact of the recent bank collapses in the United States on economic activity could be limited, markets are bracing for tighter financial conditions which could present a trade-off between financial stability concerns and monetary policy.
"Yield curves are in deep inversion and the future looks darker than it did just a few weeks ago in early February," the RBI wrote, referring to the overall global context.
The bank said India had emerged from the pandemic years stronger than initially thought with the agriculture sector seeing a seasonal uptick, industry emerging out of contraction and services maintaining momentum.
However, it raised concerns over sustained price rises saying consumer price inflation remains high and core inflation continues to defy the distinct softening of input costs. Annual inflation in February eased only marginally to 6.44% from 6.52% in January, staying above the central bank's mandated target band of 2-6%.
(Reporting by Swati Bhat; Editing by Christina Fincher)