RBI says growth momentum to continue in FY24; stresses on structural reforms

Amidst strong global headwinds the Indian economy is expected to have recorded a growth of 70 per cent in real GDP in 202223 an annual report released by the Reserve Bank of India said on TuesdayIndiarsquos growth momentum is likely to continue in 202324 even as it made a case for pushing structural reforms to deal with the geopolitical developments and also to achieve sustained growth in the mediumterm the report saidThe report flagged slowing global growth protracted geopolitical tensions and a possible upsurge in financial market volatility as possible downside risks to growthIt noted volatility has ebbed in global financial markets and risks to financial stability from the failure of banks in some advanced economies AEs in March 2023 have eased Resolute policy actions have stemmed the tide of confidence runs for nowA sustained recovery in discretionary spending particularly in contact intensive services restoration of consumer confidence high festival season spending after two consecutive years of Covid19 induced isolation and the governments thrust on capex provided impetus to the growth momentumIn the second half of the year however the pace of yearonyear growth moderated because of unfavourable base effects weakening private consumption demand caused by high inflation slowdown in export growth and sustained input cost pressures it saidldquoOn the back of sound macroeconomic policies softer commodity prices a robust financial sector a healthy corporate sector continued fiscal policy thrust on quality of government expenditure and new growth opportunities stemming from global realignment of supply chains Indias growth momentum is likely to be sustained in 202324 in an atmosphere of easing inflationary pressures the report saidSlowing global growth protracted geopolitical tensions and a possible upsurge in financial market volatility following new stress events in the global financial system however could pose downside risks to growthAlso readRailway police rescue 4yearold kidnapped from Vasai within 8 hoursIt is important therefore to sustain structural reforms to improve Indias mediumterm growth potential the 311page report saidThe RBI also said the conduct of monetary policy will continue to be guided by the objective of achieving the mediumterm target for Consumer Price Index CPI inflation of 4 per cent within a band of 2 per cent while supporting growthThe Reserve Bank said it will undertake liquidity management operations in sync with the monetary policy stance and taking into account the needs of the productive sectors of the economyDuring 202324 the report said the Reserve Bank aims at expanding the ongoing pilots in CBDCRetail and CBDCWholesale by incorporating various use cases and featuresThe pilot in CBDCRetail is proposed to be expanded to more locations and to include more participating banks the report saidThe value of eRupeeWholesale and eRupeeRetail in circulation stood at Rs 1069 crore and Rs 570 crore respectively as on March 31 2023On currency in circulation it said the value and volume of banknotes in circulation increased by 78 per cent and 44 per cent respectively during 202223 as compared with 99 per cent and 5 per cent respectively in 202122In value terms the share of Rs 500 and Rs 2000 banknotes together accounted for 879 per cent of the total value of banknotes in circulation as on March 31 2023 as compared to 871 per cent a year agoThe Reserve Bank has announced withdrawal of Rs 2000 notes and holders of the highest value currency have been given time till September 30 to exchange or deposit themIn volume terms Rs 500 denomination constituted the highest share at 379 per cent followed by Rs 10 denomination banknotes which constituted 192 per cent of the total banknotes in circulation as on March 31 2023 it saidThere were 516338 lakh pieces of Rs 500 denomination notes totalling Rs 2581690 crore at endMarch 2023 The number of Rs 500 notes at endMarch 2022 were 455468 lakhThe report also said there were 455468 lakh pieces of Rs 2000 notes amounting to Rs 362220 crore at endMarchIn volume terms the Rs 2000 notes in circulation declined to 13 per cent of total currency in circulation at endMarch 2023 compared to 16 per cent in the yearago period In value terms it too declined to 108 per cent from 138 per cent at endMarch 2022The report further said that compared to 202122 there was an increase of 84 per cent and 144 per cent in the counterfeit notes detected in the denominations of Rs 20 and Rs 500 new design respectivelyThe counterfeit notes detected in the denominations of Rs 10 Rs 100 and Rs 2000 declined by 116 per cent 147 per cent and 279 per cent respectivelyThe indent and supply of banknotes by BRBNMPL and SPMCIL stood at 226000 lakh and 226002 lakh pieces respectivelyThe total expenditure incurred on security printing during 202223 was Rs 468280 crore as against Rs 498480 crore in the previous yearThe RBI also disposed of 4824 lakh pieces of soiled Rs 2000 notes in the last fiscal up from 3847 pieces in the preceding year PTI