The Indian economy has shown sufficient endurance to the post-Covid pandemic effect in FY 22-23, however, the economy has a long way to go in recovering from the shock, according to the economists. Although the present economic condition of India is growing there are potential risks towards its growth.
However, the weakening consumption in the second half of the FY23 quarter, subdued rural demand and sustained cost pressure was a significant problem according to the annual report released by the Reserve Bank Of India on Tuesday.
The RBI also added that amidst the slow global growth, the Indian economy might face downside risks, pivotal geopolitical tensions and sufficient threats from volatile financial markets following a new series of stressful events in the global financial system.
After witnessing moderation in growth within the second half of the Fiscal Year, RBI has held the slowdown in export growth and sustained input cost pressures due to high inflation solely responsible for the present economic condition. The uneven recovery has also impacted the slow growth in the automotive market as well, affecting entry-level cars while compared to recovery in passenger cars.
It has also mentioned that there has been no major change in the rural demand curve and the sales of two-wheeler cars are lagging behind by 40%. That’s not all, even the non-agricultural and agricultural wage growth has stuck at an average of 5.8% and 4.9% respectively without witnessing much change. The after-effect of the second wave of the pandemic was quite slower when compared to the urban economy, thereby stagnating the rural wage growth for FY23.
However, RBI confirmed that a stable exchange rate and a normal monsoon are expected to evade the ongoing inflation over 2023-24. The Apex Bank also believes that it might edge down the inflation to 5.2% from the average level of 6.7%, which was the record for the last Fiscal Year.
