The Reserve Bank of India. File
| Photo Credit: Reuters

The Reserve Bank’s FI-Index, capturing the extent of financial inclusion across the country, rose to 64.2 in March 2024, showing growth across all parameters. The index captures information on various aspects of financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion.

“The value of the index for March 2024 stands at 64.2 vis-à-vis 60.1 in March 2023, with growth witnessed across all sub-indices,” the Reserve Bank of India (RBI) said in a statement on July 9. The improvement in FI-Index is mainly contributed by usage dimension, reflecting deepening of financial inclusion, it added.

The FI-Index comprises three broad parameters — access (35%), usage (45%), and quality (20%) — with each of these consisting of various dimensions, which are computed based on a number of indicators.

In August 2021, the central bank said FI-Index has been conceptualised as a comprehensive index, incorporating details of banking, investments, insurance, postal, as well as the pension sector, in consultation with government and respective sectoral regulators. The index is responsive to ease of access, availability and usage of services, and quality of services.

According to RBI, a unique feature of the index is the quality parameter which captures the quality aspect of financial inclusion as reflected by financial literacy, consumer protection and inequalities and deficiencies in services.

The Reserve Bank Of India said on Monday that India added 46.7 million jobs in the fiscal year ended March, far exceeding numbers in private surveys that point to high unemployment rates.

The employment growth rate was 6% in 2023/24 versus 3.2% in 2022/23, the RBI data on measuring industry level productivity and employment showed.

Analysts linked the lack of jobs and high inflation with PM Modi’s failure in polls last month to win a majority in the directly elected house of the parliament, meaning he had to rely on allies to return to power for a third term.

India’s total employment stood at 643.3 million in 2023/24 versus 596.7 million in FY23, RBI data showed. The central bank uses data from the government’s National Accounts and Ministry of Labour to extrapolate the country’s productivity and employment levels.

The report, a routine release from the central bank, has traditionally only shown historic numbers. On Monday, however, the central bank said it is attempting a provisional estimate of productivity for the total economy for the first time for the financial year 2023/24 based on available information.

The release of the data follows a Citibank report last week that said growth of close to 7% will only create 8 million to 9 million jobs in India, short of the 11 million to 12 million needed.

“Even 7% GDP growth might not be able to fulfil the job requirement over the next decade,” Citi’s chief India economist Samiran Chakraborty wrote in the note.

In a separate statement, the federal labour department countered Citi’s report to say its estimates suggest an average of over 20 million employment opportunities per year were created between 2017-18 to 2021-22.

Another private think tank that tracks joblessness in the country, the Centre for Monitoring Indian Economy, had estimated the unemployment rate in India rose to 8% in fiscal year 2023-24 from 7.5% and 7.7% in the preceding two years.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Mumbai:

India is at the threshold of a major structural shift in its growth trajectory, highlighted Shaktikanta Das, Reserve Bank of India Governor, on Tuesday during his address at the 188th AGM (Annual General Meeting) of Bombay Chamber of Commerce & Industry.

The governor added that India is moving ahead towards 8 per cent GDP growth in a sustained manner, adding that the average growth India recorded in the last three years is 8.3 per cent.

“If you look at the average growth India recorded over the three years, the average comes to 8.3 per cent and the current year we have given a projection of 7.2 per cent growth,” said the Governor.

He also stated that during the last year, the Indian economy has contributed a major share to the global economy and called it an achievement for India.

“Indian economy in the last financial year 2023-24 contributed to 18.5 per cent of the global growth, i.e., 18.5 per cent of the global growth was driven by India. It is an achievement; it was much lower 7 or 8 years ago and I think the IMF projects this growth to go up,” he said.

He highlighted that the major drivers of this growth are the implementation of GST, the Insolvency and Bankruptcy Code, and Flexible Inflation Targeting.

“The main drivers of this growth, particularly in the last three years, are the various structural reforms which have been undertaken and several other policy initiatives that have been undertaken in the country, including GST,” he added.

Highlighting the importance and achievements of GST, the governor added, “It (GST) has the advantage of avoiding the multiplicity of taxes. GST is one of India’s biggest structural reforms since 1947.”

He added that GST has settled down in India well because there are instances where some countries have rolled back GST after implementation. But now GST collections have touched 1.7 lakh crore in a month and it is in a range of 1.5 to 1.7 lakh crore every month.

He also shared that India is poised to become the third-largest economy from the current fifth-largest

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Mumbai:

India’s forex reserves dropped by USD 2.922 billion to USD 652.895 billion for the week ended June 14, the Reserve Bank said on Friday.

In the previous reporting week, the kitty had jumped by USD 4.307 billion to USD 655.817 billion, a new all-time high after consecutive weeks of increase in the reserves.

For the week ended June 14, foreign currency assets, a major component of the reserves, decreased by USD 2.097 billion to USD 574.24 billion, the data released on Friday showed.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

Gold reserves decreased by USD 1.015 billion to USD 55.967 billion during the week, the RBI said.

The Special Drawing Rights (SDRs) were down by USD 54 million to USD 18.107 billion, the apex bank said.

India’s reserve position with the IMF was up by USD 245 million to USD 4.581 billion in the reporting week, the apex bank data showed.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Mumbai:

The Reserve Bank of India (RBI) sold $3.65 billion on a net basis in the spot foreign exchange market in April, data released on Wednesday as part of the central bank’s monthly bulletin showed.

The RBI said it purchased nearly $8 billion and sold $11.6 billion.

In March, the central bank had bought a net of $13.2 billion in the spot market.

The Indian rupee was little changed month-on-month in April but fell to its record low of 83.5750 during the month while its upside was capped at 83.15.

The RBI’s net outstanding forward sales stood at $16.3 billon as of end-April, compared with net forward sales of $541 million at the end of the previous month, the data showed.

The central bank intervenes in the spot and forwards market to curb exchange rate volatility of the rupee.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

The latest Fitch Ratings has cited a recovery in consumer spending and increased investment. File photo
| Photo Credit: The Hindu

Fitch Ratings on Tuesday, June 18, 2024, raised India’s growth forecast for current fiscal to 7.2 per cent, from 7 per cent projected in March, citing a recovery in consumer spending and increased investment.

For the fiscal years 2025-26 and 2026-27, Fitch projected growth rates of 6.5 per cent and 6.2 per cent, respectively.

“We expect the Indian economy to expand by a strong 7.2 per cent in FY24/25 (an upward revision of 0.2 pp from the March GEO),” Fitch said in its global economic outlook report.

Fitch’s estimates are in line with that of RBI which earlier this month projected Indian economy to expand 7.2 per cent in the current fiscal on the back of improving rural demand and moderating inflation.

Investment to continue, consumer spending to pick up

Investments will continue to rise but more slowly than in recent quarters, while consumer spending will recover with elevated consumer confidence, it said.

Fitch said purchasing managers survey data point to continued growth at the start of the current financial year.

It said signs of the coming monsoon season being more normal should support growth and make inflation less volatile, though a recent heatwave poses a risk.

“We expect growth in later years to slow and approach our medium-term trend estimate,” it said, adding growth will be driven by consumer spending and investment.

The Indian economy grew 8.2 per cent in the last fiscal (2023-24), with a 7.8 per cent expansion in March quarter.

Inflation, Fitch expects, will decline to 4.5 per cent by end 2024 and average 4.3 per cent in 2025 and 2026.

Fitch said it expects the RBI to cut policy interest rates by 25 basis points this year to 6.25 per cent.

RBI Governor Shaktikanta Das on June 7, 2024, said the Monetary Policy Committee has decided to keep the repo rate unchanged at 6.5%. File
| Photo Credit: ANI

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5%. The decision, taken at the MPC’s meeting on Friday, marks the eighth time in a row that the policy rate has been put on hold to keep the focus on battling high inflation.

The MPC has revised its GDP growth forecast upwards from the earlier 7% estimate to 7.2% for the financial year 2024-2025. It has also decided to remain focused on withdrawal of accommodation to ensure that inflation does not accelerate, while supporting growth.

“These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2% while supporting growth,” Reserve Bank of India (RBI) governor Shaktikanta Das said after the meeting. 

Divided MPC

Mr. Das, along with MPC members Shashanka Bhide, Rajiv Ranjan, and Michael Debabrata Patra voted to keep the policy repo rate unchanged at 6.5% and to remain focused on the withdrawal of accommodation, while their colleagues Ashima Goyal and Jayanth R. Varma voted to reduce the policy repo rate by 25 basis points and for a change in stance to neutral. 

“There were signs of a more divided policy committee, with one additional member voting for a softening in stance as well as policy direction. The majority retained their cautious stance to guide inflation towards the 4% target on a durable basis, despite recent signs of disinflation,” said Radhika Rao, Executive Director and Senior Economist, DBS Bank, commenting on the decision.

Higher growth forecast

According to the MPC, high frequency indicators of domestic activity are showing resilience in 2024-25. The south-west monsoon is expected to be above normal, which augurs well for agriculture and rural demand, but headwinds from geopolitical tensions, volatility in international commodity prices, and geoeconomic fragmentation pose risks to the outlook. 

Taking various factors into consideration, real GDP growth for 2024-25 was projected at 7.2% as compared with the earlier projection of 7%, with the first quarter (Q1) growth estimate at 7.3%; Q2 at 7.2%; Q3 at 7.3%; and Q4 at 7.2%. The risks are evenly balanced.

Elevated food inflation

Emphasising that inflation has seen sequential moderation since February 2024, albeit in a narrow range from 5.1% in February to 4.8% in April 2024, the RBI Governor said that food inflation, however, remains elevated due to persistence of inflation pressures in vegetables, pulses, cereals, and spices. 

“Looking ahead, overlapping shocks engendered by rising incidence of adverse climate events impart considerable uncertainty to the food inflation trajectory,” he said, while announcing the MPC’s decisions. He added that volatility in crude oil prices and financial markets, along with the firming up of non-energy commodity prices, pose upside risks to inflation. 

Taking various factors into account, CPI inflation for 2024-25 is projected at 4.5%, with Q1 at 4.9%; Q2 at 3.8%; Q3 at 4.6%; and Q4 at 4.5%. The risks are evenly balanced.

Mr. Das emphasised that the path of disinflation has been interrupted by volatile and elevated food inflation due to adverse weather events. “Inflation is expected to temporarily fall below the target during Q2:2024-25 due to favourable base effect, before reversing subsequently. The MPC will remain resolute in its commitment to aligning inflation to the 4% target on a durable basis,” he said. 

The MPC reiterated the need to continue with the disinflationary stance, until a durable alignment of the headline CPI inflation with the target is achieved. 

Mumbai:

The share of Rs 500 denomination currency notes in overall currency has jumped to 86.5 per cent at the end of March 2024, as against 77.1 per cent in the year-ago period, the Reserve Bank of India (RBI) said on Thursday.

The central bank’s annual report attributed the surge primarily to the withdrawal of the Rs 2,000 denomination notes announced in May 2023. The share of this denomination has reduced to 0.2 per cent from 10.8 per cent in the year-ago period.

Volume-wise, the Rs 500 denomination was the highest at 5.16 lakh notes while the Rs 10 denomination came a distant second at 2.49 lakh as of March 31, 2024, as per data shared in an annual report.

The value and volume of banknotes in circulation increased by 3.9 per cent and 7.8 per cent, respectively, in FY24 as compared with an increase of 7.8 per cent and 4.4 per cent, during the previous fiscal year, it said.

The growth in the number of banknotes in circulation in value terms is among the lowest in recent years.

On the Rs 2,000 note withdrawal, it said about 89 per cent of notes under the denomination introduced following demonetization in 2016 had been around for over four years were due for replacement, and were not commonly used for transactions, it said.

The withdrawal also seems to have had an impact on the counterfeit notes detection, the annual report said, adding that the number of fake Rs 2,000 pieces detected jumped to over 26,000 from 9,806 in the year-ago period.

The same for Rs 500 notes declined to 85,711 pieces in FY24 from 91,110 a year earlier.

On the recently launched central bank digital currency (CBDC) or e-rupee pilot, the annual report pegged the overall outstanding value at Rs 234.12 crore as against Rs 16.39 crore in March 2023.

Over Rs 164 crore, or 70 per cent of the e-rupee, is in the Rs 500 denomination, while the Rs 200 denomination comes second at Rs 32 crore, or 13.7 per cent.

As of March 31, 97.7 per cent of the Rs 3.56 lakh crore in outstanding Rs 2,000 denomination notes were returned by the public, the annual report said.

In FY24, the RBI spent Rs 5,101 crore on security printing as against Rs 4,682 crore in the year-ago period.

The RBI annual report said it also surveyed currency usage among the public, where over 22,000 respondents across the country indicated that cash is “prevalent” even though digital modes of payments were gaining traction.

The central bank also undertook campaigns to dispel misinformation about coins, the annual report said, adding that it is actively taking forward the process of introducing new/upgraded security features for banknotes.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

 The Reserve Bank’s Annual Report for 2023-24 said that the Indian economy is navigating the drag from an adverse global macroeconomic and financial environment.
| Photo Credit: REUTERS

Indian economy is likely to grow at 7% in the current fiscal year starting April, the Reserve Bank of India (RBI) said in its annual report released on May 30.

The Indian economy, it said, expanded at a robust pace in 2023-24 (April 2023 to March 2024 financial year), with real GDP growth accelerating to 7.6% from 7.0% in the previous year – the third successive year of 7% or above growth.

“The real GDP growth for 2024-25 is projected at 7.0% with risks evenly balanced,” it said.

India’s GDP growth is robust on the back of solid investment demand which is supported by healthy balance sheets of banks and corporates, the government’s focus on capital expenditure and prudent monetary, regulatory and fiscal policies, the RBI said. The Reserve Bank’s Annual Report for 2023-24 said that the Indian economy is navigating the drag from an adverse global macroeconomic and financial environment.

Indian economy, the report said, is well-placed to step up growth trajectory over the next decade in an environment of macroeconomic and financial stability.

“As headline inflation eases towards the target, it will spur consumption demand especially in rural areas,” it said.

It further said the external sector’s strength and buffers in the form of foreign exchange reserves will insulate domestic economic activity from global spillovers.

The report, however, added that geopolitical tensions, geoeconomic fragmentation, global financial market volatility, international commodity price movements and erratic weather developments pose downside risks to the growth outlook and upside risks to the inflation outlook.

The RBI also emphasised that the Indian economy would have to navigate challenges posed by rapid adoption of AI/ML (artificial intelligence/machine learning) technologies as well as recurrent climate shocks.

The annual report is a statutory report of RBI’s central board of directors. The report covers the working and functions of the Reserve Bank of India for the April 2023-March 2024 period.

Benchmark equity indices climbed in early trade on Thursday, May 23, 2024, amid buying in blue chips Larsen & Toubro and Reliance Industries.

The 30-share BSE Sensex climbed 41.65 points to 74,262.71 in early trade. The NSE Nifty went up by 20.1 points to 22,617.90.

The BSE benchmark later traded 225.06 points higher at 74,456.44 and the Nifty quoted with a gain of 77.50 points at 22,675.30.

Among the Sensex firms, Larsen & Toubro, Asian Paints, Axis Bank, State Bank of India, Reliance Industries, Wipro, Titan and Bharti Airtel were the major gainers.

Power Grid, Sun Pharma, JSW Steel and Tata Steel were the laggards.

RBI dividend to govt

The Reserve Bank of India will pay a record $2.1 lakh crore dividend to the government for the fiscal ended March 31, more than double of what was budgeted expectation, helping shore up revenue ahead of a new government taking office.

The RBI board, at its 608th meeting on May 22, 2024,, approved the transfer of surplus, the central bank said in a statement.

“There are positives and negatives for the market today. The biggest positive is the record Rs 2.11 lakh crore dividend from the RBI to the government, which will give an additional 0.3% of GDP fiscal room for the government,” said V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

This means the government can reduce its fiscal deficit and step up infrastructure spending, he added.

“Brent crude dipping below $82 is positive for India’s macros,” Vijayakumar said.

The negative for equity markets is the Fed meeting minutes which indicate concern over the stubbornness of inflation, he noted.

In Asian markets, Seoul and Tokyo were trading in the green while Shanghai and Hong Kong quoted lower.

Wall Street ended in negative territory on Wednesday.

Global oil benchmark Brent crude declined 0.40 per cent to USD 81.57 a barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹686.04 crore on Wednesday, according to exchange data.

The BSE benchmark climbed 267.75 points or 0.36 per cent to settle at 74,221.06 on Wednesday. The NSE Nifty advanced 68.75 points or 0.31 per cent to finish at 22,597.80.