India on the track to become world's fastest growing economy, despite recession fears: RBI

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• Jul 18, 2022 | Dhupali Das

Another source of relief is the domestic inflation rate dropping from its previous peak... 

Digital Desk: Despite significant global headwinds and recession fears, the Indian economy is resilient, according to the Reserve Bank of India's latest monthly bulletin.

The bulletin said, "Despite geopolitical repercussions, there are sparks in the wind that ignite the economy's inherent strength and set it on the path to becoming the fastest expanding economy in the world, besieged though it may be by concerns of a recession."

"The Indian economy is showing endurance and dynamism despite the geopolitical scenario and high-risk fear in financial markets, which is stampeding portfolio investors and driving down all currencies against the unyielding strength of the US dollar," it added.

Further, it added that the recent improvements in the southwest monsoon and sowing activities had given rise to predictions of yet another prosperous year for agricultural production and expectations that rural demand will soon catch up to urban spending and solidify the recovery.

Another source of relief is the domestic inflation rate dropping from its previous peak. 

As per the preliminary statistics released by the National Statistical Office (NSO) on July 12, retail inflation decreased slightly in June to 7.01 percent.

The report stated that the worst of the recent increase in inflation would be left behind if the recent price reduction continues alongside the lessening of supply chain pressures, allowing the Indian economy to escape the global inflation trap. 

On the other hand, it urged rigorous monitoring of the growing trade deficit and capital outflows. In 2022, India's foreign exchange reserves had decreased by almost $40 billion.

Moreover, foreign portfolio investors were net sellers in the Indian equity market for the ninth month in a row.