The Reserve Bank of India on Wednesday released its annual report for the financial year 2017-18. While analysing the consequences of economic measures taken during the fiscal year, the central bank also predicted a strong growth trajectory of the country's economy. The report, which is released every year, analyses the working and operations of the RBI and suggests measures to improve the economic performance. Here are the main highlights from the 278-page annual report.
1. The RBI said its balance sheet size increased by 9.49 per cent for the year ended June 30, 2018, which helped shape the monetary and financial conditions during the year. The fiscal year ended with an overall surplus of Rs 50,000 crore as against Rs 30,659 crore in the previous year.
2. Around Rs 15.31-lakh crore of the total Rs 15.41-lakh crore of demonetised currency notes have been returned, which means Rs 10,720 crore of banned notes did not return to the system. This puts question mark over the government's claim on black money and the entire purpose behind demonetisation.
3. In 2017-18, the currency in circulation surpassed its pre-demonetisation level while credit growth revived to double digits. GST was an important milestone towards an efficient indirect tax structure, says the report. The after effects of demonetisation were huge with most economists agreeing on the hit the GDP figures took. However, the situation improved in FY18, which also gave a boost to the credit growth.
4. The RBI report says the Indian economy is set to step up its growth trajectory. "Infrastructure holds the key to unleashing the impulses of faster growth. In the road sector, the key targets are awarding works for around 20,000km length of national highways; and developing ring roads around 28 major cities under the Bharatmala project," says the central bank.
5. Through its Payment and Settlement System Vision-2018, the RBI has been playing a crucial role in permeation of FinTech into the economy. The RBI has worked towards building up a robust and resilient technology infrastructure to ensure smooth functioning of the payment and settlement systems in the country.
6. The monetary policy will continue to be guided by the objective of achieving the medium-term target for CPI (Consumer Price Index) inflation of 4 per cent within a band of +/- 2 per cent. Inflation eased on a year-on-year basis but has remained higher than RBI's 4 per cent target since November 2017, but it is well within the upper band of 6 per cent.
7. India has not been immune to the global financial market turmoil associated with persisting foreign portfolio outflows, which have unsettled emerging market economies, says the RBI report. The central bank says country-specific factors like normal monsoon for the third consecutive year, uptick in manufacturing activity and growth in services sector, etc, will improve the overall economy.
8. The banking sector continued to grapple with the problems of deteriorating asset quality and declining profitability in 2017-18, says the report. To align the resolution process with the Insolvency and Bankruptcy Code (IBC), the framework for resolution of stressed assets was revised, which has helped in addressing the big problem of rising stressed assets.
9. A large-scale adoption of digital modes of payments was done in 2017-18. The RBI worked towards building up a robust and resilient technology infrastructure to ensure a smooth functioning payment and settlement systems. The RBI launched Unified Payments Interface in April 2016 to provide a single interface to power multiple bank accounts into a single mobile application (of any participating bank).
(Edited by Manoj Sharma)