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Fmi Assignment 1
Fmi Assignment 1
Assignment 1
FMI by Sir Salman Badami.
The MPC kept the policy rate at 22%, foreseeing a drop in October inflation and a
continued downward trend. Despite risks from global oil prices and higher gas
tariffs, the MPC highlighted factors like fiscal consolidation and improved market
availability offsetting these risks. Positive aspects include good estimates for
crops, a reduced current account deficit, and on-target fiscal consolidation.
Stressing a tight monetary policy, the MPC aims to lower inflation to 5-7% by end-
FY25, dependent on fiscal consolidation and timely external inflows. Economic
data indicates moderate growth, with improved fiscal indicators. Although
inflation surged in September, it's expected to decrease in October. The MPC
emphasizes fiscal prudence for inflation control amid global uncertainties.
Real Sector:
Moderate economic growth, supported by increased Kharif crop production
and positive trends in key activity indicators.
External Sector:
Significant improvement in the current account balance, exports, and
remittances.
Reforms and actions against illicit activities enhance FX market sentiments.
Fiscal Sector (Q1-FY24):
Fiscal indicators improved, with reduced fiscal deficit and surplus in the
primary balance.
Continued fiscal prudence crucial for controlling inflation.
Money and Credit Trends:
Deceleration in M2 and reserve money growth.
Net Foreign Assets expansion since June, expected to improve with fiscal
consolidation and external inflows.
Inflation Outlook:
Anticipated decline in headline inflation in October.
Risks include global oil price volatility and increased gas tariffs.
Core inflation remains elevated; fiscal policy and improved food commodity
availability contribute to stabilization measures.