New Delhi: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Friday lowered the economic growth forecast for the current fiscal (FY23) to 7.2 per cent, earlier due to volatility in crude oil prices and supply chain disruptions. The estimate was 7.8 percent. to the ongoing Russia-Ukraine conflict.
Unveiling the first bi-monthly monetary policy review of the current financial year (FY23), RBI Governor Shaktikanta Das said external developments during the past two months outweighed downside risks to domestic growth and risks to inflation.
Das announced on Friday that the MPC voted unanimously to keep the repo rates unchanged at 4 per cent after the conclusion of its three-day meeting. The reverse repo rate was kept unchanged at 3.35 per cent.
During the announcement, the governor said, “The real GDP growth for 2022-23 is now at 7.2 per cent with the first quarter of 2022-23 at 16.2 per cent, the second quarter at 6.2 per cent, the third quarter at 4.1 per cent and the fourth quarter. Estimated with. At 4 per cent, assuming crude oil (Indian basket) at $100 a barrel during 2022-23,” it said, adding that the Indian economy continues to revive from its pandemic-induced contraction.
The Economic Survey in January had projected a growth rate of 8-8.5 per cent for the current fiscal.
The RBI governor said that with the easing of restrictions, domestic air passenger traffic resumed in March.
“According to our surveys, consumer confidence is improving and households’ optimism sentiments for the year ahead strengthened with an uptick in sentiment.” He said business confidence is in optimistic territory and supports a revival in economic activity.
He also said that inflation is expected to rise to 5.7 per cent for FY23 from 4.5 per cent estimated earlier.
Going forward, stronger rabi (winter crop) production should support an improvement in rural demand, while increasingly contact-intensive services should help further strengthen urban demand, he said.
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