India’s Economic Resilience in a Turbulent World

The global economic landscape is marked by volatility and uncertainty. Amidst this global tumult, India’s economic narrative is one of resilience and cautious optimism.

Global Economic Volatility

The period from 2020 to 2023 has been termed the ‘Great Volatility,’ characterized by black swan events, geopolitical conflicts, and economic fragmentations. Emerging Market Economies (EMEs) have shown remarkable resilience in this period, facing the headwinds with relative stability. However, the lingering shadow of inflation, albeit receding, and the uneven pace of global growth continue to pose challenges. The global economy remains fragile, with protectionism rising and trade decelerating. Factors such as elevated debt levels, geopolitical hostilities, and extreme weather conditions further aggravate the risks to global growth and inflation outlook.

India’s Economic Resilience

In contrast to the global scenario, India presents a picture of resilience and momentum. The real GDP growth for the second quarter of the current financial year has surpassed all forecasts. India’s strong fundamentals, healthier balance sheets of banks and corporates, fiscal consolidation on course, manageable external balance, and substantial forex reserves create congenial conditions for sustained growth.

Private consumption in India is expected to gain support from improvements in rural demand, strengthening of manufacturing activity, and continued buoyancy in services. The healthy balance sheets of banks and corporates, high capacity utilization, continuing business optimism, and the government’s thrust on infrastructure spending should propel private sector capital expenditure.

However, risks loom in the form of protracted geopolitical turmoil, volatility in global financial markets, and growing geo-economic fragmentations. Despite these challenges, the real GDP growth for 2023-24 is projected at 7.0 percent, with Q3 at 6.5 percent and Q4 at 6.0 percent.

Monetary Policy and Inflation Outlook

The Monetary Policy Committee (MPC) of the Reserve Bank of India has decided unanimously to keep the policy repo rate unchanged at 6.50 percent, focusing on the withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth. The moderation in CPI headline inflation to 4.9 percent in October from 7.4 percent in July reflects the broad-based easing in core inflation, indicative of successful disinflation through monetary policy actions. However, the near-term outlook is clouded by risks to food inflation, which might lead to an uptick in November and December.

Going ahead, the inflation outlook will be considerably influenced by uncertain food prices, elevated global sugar prices, and volatile crude oil prices. Yet, assuming normal monsoons, CPI inflation is projected at 5.4 percent for 2023-24. The ongoing rabi sowing progress for key crops like wheat, spices, and pulses needs to be closely monitored.

Financial Stability and External Sector

The Reserve Bank has judiciously used micro and macro-prudential tools to safeguard financial stability. Recent preemptive measures taken in respect of Banks and NBFCs were geared towards addressing potential risks and preserving the resilience of the financial sector. In terms of the external sector, both merchandise exports and imports have returned to expansionary territory in October. Services exports remained buoyant, and India continues to be the top remittance-receiving country. On the financing side, foreign portfolio investment (FPI) flows have seen a significant turnaround in 2023-24.


In a global economy clouded by uncertainties, India’s economic policies have been a stabilizing force. India is better placed to withstand uncertainties compared to many other countries. As India treads the path to a brighter future, the guiding philosophy is clear – progress is assured whenever there is an unalterable determination.

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