(Bloomberg) — India’s economy is on track to expand by about 7% this fiscal year as supply responses gain strength, demand improves amid easing inflation and the banking system returns to health, the country’s central bank said.
The world’s fifth-largest economy is estimated to have grown between 6.1% and 6.3% in the July-September quarter. “If this is realized, India is on course for a growth rate of about 7% in 2022-23,” the Reserve Bank of India said in its State of the Economy report, which was part of the November Bulletin released Friday. The GDP numbers are expected Nov. 30.
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The report said urban demand “appears robust” and a muted rural demand is “picking up traction.” The banking system’s capital adequacy ratio, currently at 16% of risk-weighted assets, is well above the regulatory minimum of 9%. Bad loans are also approaching 1% of the loan book after setting aside provisions.
Since May, India’s central bank has raised the benchmark policy rate by 190 basis points to tame inflation, which has stayed above a target ceiling of 6% since the beginning of the year. The RBI is expected to increase rates again in December, though likely by a smaller amount than the last three half-point hikes.
“Today, as the winds shift, the worst seems to be losing pace as we forge ahead,” the report said.
