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The broad-based strengthening of India's economic activity that is under way will likely be sustained by easing input costs and corporate profitability while inflation is expected to ease to 4.6 per cent in the first three quarters of 2024-25, according to the monthly RBI bulletin released on Wednesday.

The pace of global growth may slow further in 2024 while disinflation at varying pace in different geographies may pave the way for interest rate reductions, according to the analysis.

It also points out that the "domestic financial markets have been lifted by the abiding strength of the real economy".

The bulletin states that the fiscal position of the Centre and states has remained resilient.

Major Central direct and indirect taxes such as income tax, corporation tax and goods and services tax (GST) recorded impressive growth in H1:2023-24.

While revenue expenditure of the Centre remained modest in line with the Budget estimates, capital expenditure witnessed a robust growth.

With strong growth in tax and non-tax revenues, the states have frontloaded their capital spending, aided by the Centre's scheme for 'Special Assistance to States for Capital Investment'.

The improved revenue mobilisation by the Centre and states has helped to contain the gross fiscal deficit of the general government within 7 per cent of GDP in Q1 and Q2 of 2023-24, it added.