A latest poll among economists show that the Reserve Bank of India (RBI) is unlikely to touch the key interest rates until at least July. They point out strong growth and inflation at upper band of the central bank's target as reasons for this. With the Indian economy growing at 8.4 percent in the fourth quarter of 2023 and inflation at 5.09 percent in February, it is quite likely that RBI will keep interest rates unchanged for some time.

RBI has revised GDP growth target from 6.5 percent to 7 percent for FY24. For some economy watchers, the revision is unexpected, but the target seems achievable, in the background of robust demand condition, improving rural consumption, manufacturing sector adding more jobs, service sector remaining strong, healthy trend in GST collection, high corporate profits, strong bank balance sheet and other positives.

Meanwhile, in a similar tone, Finance Ministry’s monthly review released last week states that robust investment and private consumption demand are driving India’s growth. It adds that strong demands is evident from a number of indicators like passenger vehicle sales, air passenger traffic, digital payments, demand for residential properties in tier-2 and tier-3 cities and so on. No doubt, GDP numbers in the coming quarters will reflect this strong demand.

It is also encouraging to see narrowing merchandise trade deficit, healthy services exports and increased remittances on the external front. This will help tighten noose over Current Account Deficit, which, according to latest estimate, is likely to narrow to less than 1 percent of GDP in FY24. At the same time, experts point out that foreign direct investment and portfolio flows are likely to improve in the coming months. All these augur well for the Indian economy.

I invite your opinions.