RBI governor: India's pace of growth to accelerate in 2018-19

Urjit PatelThe Indian economy gave a resilient performance in 201718 and the countrys growth is expected to accelerate next fiscal RBI Governor Urjit Patel has said Although the real GDP growth was moderated to 66 per cent from 71 per cent a year ago there was a strong rebound in the second half of the year on the back of a turnaround in investment demand the Reserve Bank of India governor saidPatel was addressing the International Monetary Finance Committee here yesterday The Indian economy gave a resilient performance in 201718 Patel said This was supported by an acceleration in manufacturing rising sales growth a pickup in capacity utilisation strong activity in the services sector and a record agricultural harvest the RBI governor addedSeveral factors are expected to help accelerate the pace of growth in 201819 There are now clearer signs that the revival in investment activity will be sustained he said Global demand has been improving which should encourage exports and boost fresh investments Patel said adding that on the whole real GDP growth was expected to expand at 74 per cent in 201819 with risks evenly balancedIn his address Patel said since November 2016 headline consumer price inflation had generally remained below the mediumterm target of four per cent An unusual spike in vegetables prices pushed up inflation to a recent peak of 52 per cent in December but it eased in subsequent months to reach 43 per cent in March he said Patel said several factors were likely to influence the inflation outlook including a possible moderation in food prices if the monsoon turned out to be normal and was supported by an effective food supply management Countervailing this upside risks emanate from the distinct hardening bias in crude oil prices the steady firming up of inflation excluding food and fuel mirroring pick up in domestic demand and spillovers from financial volatility as markets reprice the path of monetary policy normalisation by systemic central banks he saidNoting that risks to inflation are tilted to the upside the monetary policy rate was kept unchanged at 60 per cent in April 2018 with a neutral stance Patel saidAsserting that the government is committed to fiscal prudence the RBI governor said aided by buoyancy in tax revenues and rationalisation of subsidies the gross fiscal deficit GFD of the central government has been steadily brought down since 201314 to 35 per cent of GDP in 201718 without compromising on public investment requirements and social sector spendingThe GFD is budgeted lower at 33 per cent in 201819 he said The government has accepted a debt rule that will bring down the debttoGDP ratio to 40 per cent over a period of time by 202425 Patel said the goods and services tax GST which was implemented from July 2017 has reformed the system of indirect taxes by simplifying payments and credits and improving the efficiency of movement of goods across the countryAutomation of tax payments and teambased assessment with dynamic jurisdiction without direct interface with tax payers has improved overall efficiency and transparency of revenue administration he said Patel said with the pace of import growth relative to that of exports the current account deficit CAD expanded from 07 per cent in 201617 to 19 per cent for the first nine months of 201718External financing conditions remained comfortable boosted mainly by robust inflows of foreign direct investment FDI he said The UNCTADs survey of multinational enterprises ranked India as the third most favoured destination for FDI for 201719 Reflecting these developments Indias foreign exchange reserves at USD 424 billion were equivalent of 11 months of imports he addedIndia has persevered with structural reforms over a wide area ranging from a flexible inflation targeting framework for monetary policy liberalisation of FDI flows a unique identification Aadhaar backed direct benefit transfers an insolvency and bankruptcy code the GST realty reforms and a swathe of measures for improvement in the ease of doing business more generally he said These factors have improved Indias global ranking in the World Banks Ease of Doing Business Patel addedCatch up on all the latest Crime National International and Hatke news here Also download the new midday Android and iOS apps to get latest updatesThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever