The Indian economy is expected to maintain the pace of expansion achieved in 2022-23 unlike the global economy, an article published by the RBI said. The bank collapses in the US would have a limited impact on global economic activity but may affect financial stability, the article said. “We remain optimistic about India, whatever the odds,” the article on the state of the economy published in the RBI’s March bulletin said. The observation comes at a time financial markets have been rocked by the collapse of two lenders in the US quickly followed by UBS rescuing Credit Suisse — along with the write-down of $17 billion of AT1 bonds by Credit Suisse that spooked investors.

While the direct impact of the banking crisis on economic activity could be limited, the markets are bracing for tighter financial conditions which could lead to a trade-off between greater financial instability and the conduct of a disinflationary monetary policy. However, on the Indian economy, the report noted that it is exhibiting resilience in an international environment shrouded with uncertainty. ``Growth impulses are getting further strengthened by the easing of supply chain pressures and a rebound in services activity,’’ the article said, while citing the second advance estimates of national income released by the National Statistical Office (NSO) on February 28. The data release indicated the Indian economy is intrinsically better positioned than many parts of the world to head into a challenging year ahead, mainly because of its demonstrated resilience and its reliance on domestic drivers.

“Even as global growth is set to slow down or even enter a recession in 2023 as global financial markets waver, India has emerged from the pandemic years stronger than initially thought, with a steady gathering of momentum since the second quarter of the current financial year,’’ the article said. The year-on-year growth rates, the article said, do not reflect this pick-up of pace because by construction they are saddled with statistical base effects and instead suggest a sequential slowing down through successive quarters of 2022-23. The article has been authored by a team led by RBI deputy-governor Michael Patra. The authors said India’s real GDP can go up from Rs 159.7 lakh crore in 2022-23 to Rs 170.9 lakh crore against the present projection of Rs 169.7 lakh crore in 2023-24.