Sab changa si? RBI MPC minutes suggest India is in a 'Goldilocks' scenario
inflation and growth forecast of 4.5 per cent and 7 per cent each for FY25, India's policymakers are inferring that the economy is in a 'Goldilocks scenario'. However, economists say they must err on the side of caution.
The six members of the Reserve Bank of India’s Monetary Policy Committee (MPC) broadly agreed that while there is a need to be vigilant, there is some comfort in retail inflation in India.
At the same time, they also agreed that the Indian economy is currently showing resilience on the growth front, according to the minutes of the latest policy meeting.
Yet, economists are tempering expectations, given the many headwinds overseas and otherwise.
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“RBI’s FY25 growth-inflation forecast suggests a Goldilocks scenario. However, caution is warranted amidst heightened uncertainty (vagaries of climate change causing food inflation volatility, geopolitical spillovers, etc.) and the need to preserve inflation-fighting credibility in the post-COVID phase," wrote Yuvika Singhal, Vivek Kumar and Shubada Rao, economists at QuantEco Research in a note.
A Goldilocks scenario is one where the economy is not hot enough to give inflation a filip, but growing fast enough to evade a recessionary environment.
No room for errors
Most members of the MPC seem to agree on growth prospects. Interestingly enough, RBI's Deputy Governor Michael Patra spoke of sustainable and inclusive growth while
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