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India’s pace of growth to accelerate in 2018-19: RBI Governor to IMF committee

Reserve Bank of India (RBI) Governor Urjit Patel addressing the International Monetary Finance Committee in Washington on Saturday predicted that the Indian economy is expected to accelerate next fiscal after a resilient performance in 2017-18.

“The Indian economy turned in a resilient performance in 2017-18,” Patel said.

Although the real GDP growth was moderated to 6.6 percent from 7.1 percent a year ago, there was a strong rebound in the second half of the year on the back of a turnaround in investment demand, he said.

This was supported by an acceleration in manufacturing, rising sales growth, a pick-up in capacity utilization, strong activity in the services sector and a record agricultural harvest, the RBI governor added.

Patel said several factors were likely to influence the inflation outlook, including a possible moderation in food prices if the monsoon turned out to be normal and was supported by an effective food supply management.

“Countervailing this, upside risks emanate from the distinct hardening bias in crude oil prices, the steady firming up of inflation excluding food and fuel mirroring pick up in domestic demand, and spillovers from financial volatility as markets re-price the path of monetary policy normalization by systemic central banks,” he said.

India has persevered with structural reforms over a wide area ranging from a flexible inflation targeting framework for monetary policy; liberalisation of FDI flows; a unique identification (Aadhaar) backed direct benefit transfers; an insolvency and bankruptcy code; the GST; realty reforms; and a swathe of measures for improvement in the ease of doing business more generally.

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