BI’s Positive Economic Forecast Amid Record Balance Sheet Growth - RBI's Balance Sheet became 2.5 Times Pakistan's GDP

According to its latest annual report, the Reserve Bank of India (RBI) announced that its balance sheet has grown by 11.08% to reach Rs 70.48 lakh crore as of March 31, 2024. This balance sheet size, equivalent to US$844.76 billion, is about 2.5 times larger than Pakistan's GDP, which the International Monetary Fund estimates at $338.24 billion.

In the previous fiscal year (FY23), the RBI's balance sheet was Rs 63.44 lakh crore. The bank noted that its balance sheet has returned to pre-pandemic levels, now making up 24.1% of India's GDP at the end of March 2024, up from 23.5% at the end of March 2023.

For FY24, the RBI saw its income rise by 17.04% while its expenses dropped by 56.30%. This led to a significant increase in surplus, which grew by 141.23% to Rs 2.11 lakh crore. This surplus was recently transferred to the central government. Additionally, the RBI allocated Rs 42,820 crore to its contingency fund in FY24.

Looking ahead, the RBI is optimistic about the Indian economy, noting strong macroeconomic fundamentals. However, it highlighted that food inflation remains a concern due to recurring supply issues, which is slowing down the alignment of overall inflation with targets.

The government’s ongoing focus on capital expenditure (capex) along with fiscal consolidation, and positive consumer and business sentiment, are seen as good signs for investment and consumption demand.

The RBI is forecasting a real GDP growth of around 7% for FY25. It believes that the Indian economy is well-positioned to grow significantly over the next decade with stable macroeconomic and financial conditions.

As headline inflation decreases towards the target, this is expected to boost consumption demand, especially in rural areas. The report also noted that India's strong external sector and foreign exchange reserves will help protect domestic economic activity from global economic impacts.