A Moody’s sign on the 7 World Trade Center tower is photographed in New York.
| Photo Credit: Reuters

Moody’s Investors Service on March 7 said that India’s robust economic growth will continue and its real GDP growth will accelerate to around 8% in 2023-24 from 7% in 2022-23.

“We expect India to be the fastest-growing economy among major G20 countries… Government capital expenditure and strong domestic consumption will underpin India’s economic growth. Moreover, India is poised to benefit from increased global trade and investment opportunities arising from companies’ strategies to diversify away from China,” the rating major said in an outlook report on India’s banking sector.

The firm expects India’s inflation rate to decline to 5.5% in 2023-24 from a peak of 6.7% in 2022-23, and noted that further disinflation will support monetary policy easing, going forward.

Moody’s growth estimate for this year is higher than the 7.6% estimate projected by the National Statistical Office (NSO) in its second advance national income estimates released on February 29. On March 6, Reserve Bank of India Governor Shaktikanta Das said that real GDP growth is likely to be closer to 8% as the NSO’s current estimate of 5.9% GDP growth for the final quarter of the year may be overshot.

Government capital expenditure and strong domestic consumption will underpin India’s economic growth. Moreover, India is poised to benefit from increased global trade and investment opportunities arising from companies’ strategies to diversify away from China, it said.

“We expect India’s inflation rate will decline to 5.5% in 2023-24 from a peak of 6.7 per cent in fiscal 2022-23, and further disinflation will support monetary easing going forward,” it said.

With regard to the banking sector, the report said, non-performing assets (NPAs) will continue to fall as the operating environment improves.

The system wide NPA ratio dropped to 3.2% as at September-end 2023 from a peak of 11.2% at the end of March 2018 because of recoveries and write-offs of legacy problem loans.

Slippage ratios — or the ratios of newly accredited NPAs to total standard assets during a period — will stay low, helped by India’s strong economic growth, it said.

“We expect banks’ Common Equity Tier 1 ratios to decline 50-80 basis points because of increase in risk weights for exposures to NBFCs and unsecured retail loans,” Moody’s said.

(with inputs from PTI)

The Monetary Policy Committee (MPC) of the Reserve Bank of India on August 10 decided unanimously to keep the policy repo rate unchanged at 6.50%. 
| Photo Credit: The Hindu

The Monetary Policy Committee (MPC) of the Reserve Bank of India on August 10 decided unanimously to keep the policy repo rate unchanged at 6.50%. 

Announcing the bi-monthly monetary policy on Friday, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 6.5 per cent.

The Governor said the real GDP growth for 2023-24 is projected at 6.5%. The latest CPI inflation projection for 2023-24 is at 5.4%, the same as projected previously. Indian forex reserves stood at $586.9 billion as on September 29.

Mr. Das said inflation is likely to ease in September, and the MPC would remain watchful of inflation and remain resolute in aligning inflation to the targeted level. Near-term inflation to soften on lowering of vegetable price and reduction in cooking gas cylinder rate, he added.

Domestic economy exhibits resilience on the back of strong demand, the Governor added.

Private sector capex is gaining ground as suggested by production of capital goods, he said.

The transmission of 250 basis point repo rate cut is still incomplete, the RBI Governor said.

The indications are that food inflation may not see sustained easing in Q3, the Governor added.

RBI may have to consider open market operation with regard to G-secs to manage liquidity, Mr. Das said.

RBI also has decided to double the gold loan under the bullet payment scheme to ₹4 lakh for Urban Cooperative Banks. The Payment Infrastructure Development Fund scheme has been extended by two years to December 2025. Internal Ombudsman Scheme to be further fine-tuned to safeguard the interest of customers, the Governor said.

The government has mandated the RBI to keep CPI inflation at 4 per cent with a margin of 2 per cent on either side.