Economy to be in growth mode, says apex bank

The Reserve Bank of India (RBI) has painted a bullish picture of the Indian economy saying the growth prospects are expected to get a furth...

The Reserve Bank of India (RBI) has painted a bullish picture of the Indian economy saying the growth prospects are expected to get a further boost from the envisaged fiscal consolidation under the Fiscal Responsibility and Budget Management Act, 2003.

It said meeting targets under the Act will release additional resources for productive private sector investment. This is expected to provide additional employment opportunities and enable the economy to realise its potential, RBI has said in its report on Currency and Finance 2003-04.

RBI said notwithstanding the sharp rise in oil imports, the balance of payment position remained comfortable. The strong growth in merchandise exports was supplemented by exports of services and buoyant remittances. The current account is expected to post a marginal surplus in 2004-05, it said.

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Foreign direct investment inflows have recorded a significant increase during 2004-05 so far and portfolio inflows have revived in the recent months. The comfortable BoP position is reflected in the foreign exchange reserves, which have increased by US$ 16.7 billion during 2004-05 so far (up to December 10, 2004).

The overall approach to the management of India’s foreign exchange reserves in recent years has reflected the changing composition of the BoP, and has endeavoured to reflect the ‘liquidity risks’ associated with different types of flows and other requirements.