RBI Bulletin Article: Excoriating Inflation and Reviving Investment

• RBI officials warn of a slowing growth and high inflation in India, urging action to excoriate inflation and revive investment.

• The decline in retail inflation to 5.5% in November from 6.2% in October is linked to easing food prices.

• The slowdown in consumer demand is associated with slower corporate wage growth.

• The slowing rate of nominal GDP is emerging as a headwind that could hinder fiscal spending to achieve budgetary deficit and debt targets.

• The article warns that geopolitical tensions, concerns over growing protectionism, and a large public debt overhang could adversely impact emerging market economies (EMEs).

• The currencies and equities of EMEs would remain vulnerable to sharp bouts of declines seen in 2024 in a highly uncertain environment for trade and capital flows.