MUMBAI: Pitching for structural reforms to reinforce investor confidence, Reserve Bank of India has said falling inflation and political stability have helped check the macroeconomic vulnerabilities, while retail inflation is expected to stabilize near 6 per cent level in 2015.
The central bank, however, flagged lower revenue mobilization this fiscal as a “major concern” and said that the asset quality remains a grey area in the banking sector.
It also sounded caution over the recent phenomenon of FIIs showing greater interest in the Indian debt markets, saying this trend can turn volatile in the wake of changes in global markets, especially in the US, the world’s largest economy.
If the US surprises investors with changes in its monetary policy, there might be certain adverse impact on domestic markets, RBI said.
“On the domestic front, macroeconomic vulnerabilities have abated significantly in recent months on the back of improvement in growth outlook, fall in inflation, recovery in external sector and political stability,” the central bank said in its latest Financial Stability Report (FSR).
Inflation, a guiding factor which has resulted in the elevated rate structure, will be at 6 per cent-mark for 2015, up from the 4.4 per cent in November 2014, it said.
“The Reserve Bank’s latest projections suggest that CPI inflation over the next 12 months may hover around 6 per cent if international crude prices remain at the current levels and monsoon next year turns out to be normal.”
The RBI acknowledged investor optimism over the India growth story and said the challenge ahead for the government is to deliver “commensurate structural reforms”.-PTI
Thank You For Your Vote!
Sorry You have Already Voted!
