Mumbai. The Reserve Bank of India (RBI) has projected the Indian economy to grow at a rate of seven percent in the current financial year. This will be the fastest pace of growth among the world’s major economies. The central bank has expressed hope for a decline in overall inflation in its annual report for 2023-24. However, indicating an increase in food inflation, the report said that it will remain vulnerable to supply-side shocks.
The size of the Reserve Bank of India’s book balance sheet has increased by 11.08 percent to Rs 70.47 lakh crore by March 2024. This is about 2.5 times the total GDP of Pakistan (about US $ 340 billion). The report said that the Indian economy expanded at a strong pace in 2023-24 (April 2023 to March 2024 financial year), increasing the real GDP growth rate to 7.6 percent. It was seven percent in 2022-23. It remained seven percent or more for the third consecutive year. In the financial year 2023-24, the economy showed resilience despite constant challenges.
GDP growth has been supported by healthy balance sheets of banks and corporates, the government’s focus on capital expenditure, and prudent monetary, regulatory, and fiscal policies. However, the Indian economy is facing an unfavorable global macroeconomic and financial environment. The Minimum Support Price (MSP) ensured a minimum profit of 50 percent over the cost of production for all crops in both Kharif and Rabi seasons of FY 2023-24. According to the report, the Indian economy is well positioned to accelerate the pace of growth in the next decade in a scenario of macroeconomic and financial stability.
It said, “With the overall (headline) inflation moving towards the targeted level, consumption demand will pick up, especially in rural areas. The strength of the ‘foreign’ sector and foreign exchange reserves will protect domestic economic activity from global impacts.” However, the report also said that geopolitical tensions, geoeconomic fragmentation, global financial market instability, fluctuations in international commodity prices and uncertain seasonal events pose a risk of slowing growth and rising inflation.
RBI said, “Real (gross domestic product) GDP growth is estimated to be seven percent for 2024-25, with risks being equal on both sides.” RBI said that the size of its book was Rs 63.45 lakh crore in 2022-23. It has increased to Rs 7,02,946.97 crore in the financial year 2023-24. The book grew to 24.1 percent of India’s GDP by the end of March 2024, which was 23.5 percent a year ago.
The central bank’s income increased by 17.04 percent in FY 2024, while expenditure decreased by 56.3 percent. With the jump in interest income from foreign securities, the RBI’s surplus increased by 141.23 percent to Rs 2.11 lakh crore, which it transferred to the central government last week. Apart from this, RBI provided Rs 42,820 crore for the Contingency Fund (CF) in FY 2023-24.
RBI made a profit of Rs 83,616 crore from foreign exchange transactions. Interest income from foreign securities increased to Rs 65,328 crore, which helped it increase the size of its contingency fund. The annual report is a statutory report of the Central Board of Directors of RBI. The report covers the functioning and operations of the Reserve Bank of India for the period April 2023 to March 2024.
On the financial sector, the RBI said that unclaimed deposits with banks increased by 26 per cent year-on-year to Rs 78,213 crore at the end of March 2024. The amount in the Depositor Education and Awareness Fund was Rs 62,225 crore. All banks, including cooperative banks, transfer unclaimed deposits of account holders lying in their accounts for 10 or more years to the Depositor Education and Awareness (DEA) Fund of the Reserve Bank of India. Cases of fraud related to banks increased to 36,075 in the last financial year (2023-24). However, the amount of fraud during this period decreased by 46.7 percent to Rs 13,930 crore.
According to the report, in order to curb fraud and further improve the payment experience, the possibility of real-time verification of the name of the payee before the actual transfer of funds will be explored in compliance with the new Act ‘Digital Personal Information Protection Act, 2023’. An assessment of fraud cases in the last three years indicates that while private sector banks reported the highest number of fraud cases, public sector banks continued to contribute the most in terms of the amount involved in fraud.
It said, “In terms of number, the frauds occurred mainly in the digital payment category such as card/internet. In terms of value, the frauds were mainly in the loan (advance category).” Private sector banks reported the highest number of cases in small amount card/internet frauds. At the same time, frauds in public sector banks were mainly in the loan category. Apart from this, analysis of fraud incidents reported during 2022-23 and 2023-24 shows that there is a significant time-gap between the date of occurrence of fraud and its detection.
The report said, “In terms of value, the amount involved in frauds in the last financial year is 94 per cent of the frauds reported in 2022-23.” The RBI also stressed that the Indian economy will have to face the challenges posed by the rapid adoption of AI/ML (artificial intelligence/machine learning) technologies as well as recurring climate shocks.