Macroeconomic stability getting further entrenched

Macroeconomic stability is getting further entrenched with inflation being brought into the tolerance band and lead indicators suggesting that the current account deficit is on course to narrow through the rest of 2022 and 2023, according to an article in RBI’s latest monthly bulletin.

Recent data arrivals indicate that the first milestone of monetary policy is being passed – bringing inflation into the tolerance band (of 4 per cent +/- 2 per cent), said RBI officials in the article “State of the Economy”.

The objective during 2023 is to tether inflation therein so that it aligns with the target by 2024 – the second milestone, they added.

Fiscal consolidation is underway at central and sub-national levels, graduated to nurture the pace of the economic recovery, per the article.

Lead indicators suggest that the current account deficit is on course to narrow through the rest of 2022 and 2023, the authors said.

They noted that the softening of commodity prices and other costs amidst strong revenues appears to have boosted corporate performance.

The officials noted that the prospect of India as a bright spot amidst 2023’s encircling gloom is burnished by most recent history and current developments.

By cross-country standards, the economy exhibited resilience through 2022 in the face of the triad of shocks – war; monetary policy tightening; and recurring waves of the pandemic, they added.