India's economy drawing strength from its macroeconomic fundamentals

RBI Governor Shaktikanta Das on Friday said that despite a hostile and uncertain international environment, India’s economy continues to remain resilient, drawing strength from its macroeconomic fundamentals. Addressing the 22nd Fixed Income Money Market and Derivatives Association- FIMMDA and Primary Dealers Association of India -PDAI Annual Conference in Dubai, Das said India’s financial system remains robust and stable with bank credit growing in double digits. Admitting that inflation has remained elevated, the RBI Governor however added that there has been a welcome softening during November and December 2022.Talking about the Current Account Deficit, Das said it is eminently manageable, adding that the average CAD to GDP ratio stood at 3.3 percent during the first half of FY23. The RBI Governor said net FDI flows remain strong and foreign portfolio flows have resumed since July 2022. He informed that the size of forex reserves is comfortable  while the country’s external debt ratios are low by international standards. Mr. Das added that liquidity in the government securities and the overnight money markets have grown.
On rupee depreciation, Das said the currency fell seven percent against the US dollar during the initial pandemic days and nine percent between February and November last year in view of the Ukraine war. He, however added that the rupee outperformed the currencies of most advanced and many emerging market economies. Acknowledging that the global economy is still marred by shocks and uncertainty and the IMF projecting contractions in over one-third of the global economy, Das said RBI has remained and will continue to remain steadfast in its commitment to keep the ship stable while continuing to move ahead. Stating that India is widely seen as a bright spot in an otherwise gloomy world, the RBI Governor said Indian financial markets have been driven by two key objectives - stability and development, adding that crisis management has been a key component in this journey. Das called upon stakeholders like Fixed Income Money Market and Derivatives Association of India - FIMMDA and Primary Dealers Association of India -PDAI to work together with the apex bank as market participants prepare themselves to manage the changes and the risks associated with globally integrated markets.