The Reserve Bank of India’s (RBI) Governor Shaktikanta Das gave the first monetary policy statement of 2024 on Thursday, forecasting the condition of inflation, economic growth and possibilities of emerging companies’ contributions to the GDP (Gross Domestic Product) of the nation.
Das said the global economy continues to present a mixed picture, where inflation is seen to cool down closer to the framed target but is still challenged by the ongoing wars and conflicts and the emergence of new flashpoints in different parts of the world.
Increasing geopolitical tensions are leading to supply chain disruptions and price volatility in key commodities, particularly crude oil, added the Governor of RBI.
Headline inflation, after moderating to 4.9% in October, rose to 5.7% in December 2023, due to food inflation, mostly vegetables, Das also said. However, core inflation excluding food and fuel has been softening due to moderating commodity prices. The RBI reiterated its commitment in bringing down inflation to 4%.
Amidst the current headwinds, elevated level of public debt is raising serious concerns on macroeconomic stability in many countries, said Das in the policy statement and continued, the global public debt to GDP ratio is projected to reach 100% by the end of this decade.
Das revealed annual GDP growth for 2024-25 is projected at 7%, which is 7.2% in first quarter; 6.8% in second quarter; 7% in third quarter; and 6.9% in the last quarter.
The monetary policy statement of RBI revealed the public debt levels in advanced economies (AEs) are much higher than those in emerging market economies (EMEs). It also mentioned reducing debt burdens is necessary to create fiscal space for new investments in priority areas, including green transition.
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