Reserve Bank of India (RBI) Governor Urjit Patel said with growth picking up in the second quarter of the current financial year, the economic slowdown may have bottomed out.
‘Financial markets have shown resilience, stability amid heightened volatility’
Official data released this month, showed gross domestic product (GDP) in the July-September quarter expanded 6.3% year-on-year, snapping a four-quarter slowdown. Growth in the preceding quarter was 5.7%.
While structural changes, such as the introduction of the Goods and Services Tax (GST), may result in temporary disruptions, they were “efficiency augmenting” in the medium to long term.
He said the current account deficit “remains within sustainable levels”, and other indicators of external viability also reflected a healthy improvement.
International investors warming up
The RBI chief said international investors had warmed to the Indian economy as reflected in the sizeable foreign investment inflows.
Foreign Exchange Reserves
At the same time, building up adequate buffers in foreign exchange reserves was a natural “self-insurance” to manage risks arising out of volatile capital flows.
Monetary policy committee
The monetary policy committee has left interest rates unchanged for two successive bimonthly policy reviews, citing concerns about the outlook for inflation. The RBI has also retained a ‘neutral’ policy stance