Global Economy and Debt Scenario

The global economy faces heightened risks due to prolonged geopolitical tensions, elevated public debt, and slow progress in disinflation.
Despite these challenges, the global financial system remains resilient, and financial conditions are stable.
The goal of bringing inflation down to targets remains the key focus of monetary policy authorities worldwide.

Global public debt has increased to 93.2% of GDP by end-2023, nine percentage points above its pre-pandemic level.
The two largest economies, the US and China, are leading the increase in global debt.
Private debt also remains elevated, with global debt standing at 239.9% of GDP, comprising public debt of 97.7trillionandprivatedebtof97.7 trillion and private debt of 97.7trillionandprivatedebtof153.7 trillion as of end-2023.

India's economy is exhibiting resilience and remains the fastest growing major economy, with a contribution to global growth rising to 18.5% in 2023-24.
Real GDP rose by 8.2% in 2023-24, up from 7.0% in the previous year, despite muted private and government final consumption and external demand conditions.
The Monetary Policy Committee (MPC) has projected real GDP to grow by 7.2% during 2024-25.

CPI inflation eased to 4.7% in May 2024 from 5.7% in December 2023, but its near-term trajectory remains vulnerable to volatile food prices.
Food inflation edged up to 7.9% in May 2024 from 7.6% in January 2024.
Core inflation (CPI excluding food and fuel) is witnessing a sustained decline, easing to 3.0% in May 2024, its lowest level in the current CPI series.

India's current account deficit moderated to 23.2billion(0.723.2 billion (0.7% of GDP) during 2023-24 from 23.2billion(0.767.0 billion (2.0% of GDP) during the previous year.
The moderation in trade deficit, alongside sustained buoyancy in services exports and remittances, has led to a current account surplus of 0.6% of GDP at current market prices in Q4:2023-24.

Fiscal consolidation, buoyant tax collections, and improvement in the quality of spending have been the distinguishing features of the Union Government's fiscal position.
The gross fiscal deficit (GFD) was 5.6% of GDP in 2023-24, as against the budget estimates (BE) of 5.9%.
Gross tax collections posted double-digit growth, driven up by direct tax collections.

The assets under management (AUM) of the mutual fund (MF) industry grew by 35.5% during 2023-24.
Analysis of cyber incidents reported by regulated entities (REs) to the Reserve Bank shows that 69% of incidents were reported by SCBs, 19% by UCBs, and 12% by NBFCs.

The asset quality of SCBs recorded sustained improvement, with their GNPA ratio moderating to a 12-year low in March 2024.
Their NNPA ratio too improved to a record low 0.6.
Net interest income (NII) of SCBs increased during 2023-24, with a surge in trading income augmenting other operating income (OOI).
Profit after tax (PAT) rose by 32.5% (y-o-y) in March 2024, in spite of a large increase in operating expenses.
The return on assets (RoA) and return on equity (RoE) remained strong at 1.3% and 13.8%, respectively, in March 2024.

Network analysis shows that total outstanding bilateral exposures between financial institutions are expanding, with SCBs holding the largest share.
A simulated contagion analysis reveals that losses due to the failure of five banks with the maximum capacity to cause contagion would not lead to the failure of any additional bank.

Introduction of Beta version of T+0 rolling settlement cycle on an optional basis.
Voluntary transition of Small Finance Banks to Universal Banks.
Omnibus Framework for Investments in Alternative Investment Funds (AIFs) recognising Self-Regulatory Organisations (SROs) for REs.
Credit/Investment Framework for dealing with D-SIBs.

Current deposit insurance limit is ₹5 lakh, covering 97.8% of total deposit accounts (289.8 crore).

Global economy faces heightened risks from prolonged geopolitical tensions, elevated public debt, and slow progress in disinflation.
Financial conditions remain stable, with the goal of bringing inflation down to targets remaining the key focus of monetary policy authorities.
Global public debt expansion has accentuated concerns about its sustainability, exacerbated by elevated interest rates.

Return on Assets (RoA) and Return on Equity (RoE) remained strong at 1.3% and 13.8%, respectively, in March 2024.
Credit-Deposit (C-D) ratio has been rising since September 2021, peaking at 78.8% in December 2023 and moderating to 76.8% at end-March 2024.
GNPA ratio of all SCBs may improve to 2.5% by March 2025 under the baseline scenario.
Only one of the top 100 borrower accounts was classified under the NPA category as at end-March 2024.

Capital to Risk-Weighted Assets Ratio (CRAR) of 46 major banks is projected to slip from 16.7% in March 2024 to 16.1% by March 2025 under the baseline scenario.
CET1 capital ratio of select 46 SCBs may decline from 13.8% in March 2024 to 13.4% a year ahead under the baseline scenario.

Capital position has been continuously improving, with CRAR increasing to 17.5% in March 2024.
RoA and RoE ratios increased during 2023-24, with RoA at 0.8% and RoE at 7.9% in March 2024.

GNPA ratio continued its downward trajectory in the post-pandemic period, reaching 4.0% in March 2024.
Capital position remains healthy, with CRAR standing at 26.6% in March 2024, well above the regulatory minimum requirement.