India consumption, investment less prone to external headwinds: RBI bulletin

Reserve Bank of India

The Reserve Bank of India’s (RBI) bulletin released on April 22 said that the even though the dampening global economic outlook is likely to impact India’s growth amid global tensions, but domestic growth engines such as consumption and investment are relatively less susceptible.

“Although the dampening global economic outlook could impact India’s economic growth through weaker external demand, the domestic growth engines, viz., consumption and investment, are relatively less susceptible to external headwinds,” RBI bulletin said.

India also has a low external vulnerability as reflected in its modest external debt-GDP ratio of 19 per cent and substantial forex reserves (close to 11 months of imports cover), the bulletin added.

India’s position as the fastest growing major economy, coupled with macroeconomic stability, makes it a preferable investment destination in a world characterised by growth slowdown and macro vulnerabilities, the bulletin added.

Additionally, a stable financial sector provides the backbone for sustainable growth, as the Indian financial system has become more robust and diverse, including banks and NBFCs being resilient to macrofinancial shocks, the RBI bulletin said.

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