Economy Resilient, To Grow Between 6.1 Per Cent And 6.3 Per Cent in Q2: RBI Bulletin

The RBI said with headline inflation beginning to show signs of easing, the domestic macroeconomic outlook can best be characterised as resilient, but sensitive to formidable global headwinds

The RBI's MPC that sets the policy rates has hiked the key lending rate by 190 basis points so far in the current rate hike cycle to tame surging inflation.

India's economy is expected to grow between 6.1 per cent and 6.3 per cent in the second quarter (Q2) of the current financial year based on high frequency indicators and economic prediction models, the Reserve Bank of India (RBI) said in its monthly bulletin on Friday.

“If this is realised, India is on course for a growth rate of about 7 per cent in 2022-23," the central bank said.

Data for the July-September quarter will be released at the end of this month.

"With headline inflation beginning to show signs of easing, the domestic macroeconomic outlook can best be characterised as resilient, but sensitive to formidable global headwinds," the RBI said.

"While urban demand appears to be robust, rural demand is muted, but more recently picking up traction." The central bank, however, highlighted that the global economy continues to be clouded with downside risks, with global financial conditions tightening and deteriorating market liquidity amplifying financial price movements. Markets are now pricing in moderate increases in policy rates and risk-on appetite has returned. In India, supply responses in the economy are gaining strength," the RBI said.

The article published in the latest RBI bulletin also said the outlook for the global economy remains clouded with downside risks. Global financial conditions have been tightening and deteriorating market liquidity is amplifying financial price movements.

Markets are now pricing in moderate increases in policy rates and risk-on appetite has returned. In India, supply responses in the economy are gaining strength, it noted.

Urban demand appears robust, while rural demand is muted but more recently picking up traction, it added.

The RBI's monetary policy committee (MPC) that sets the policy rates has hiked the key lending rate by 190 basis points so far in the current rate hike cycle to tame surging inflation.

The article has been prepared by a team led by RBI Deputy Governor Michael Debabrata Patra.

The RBI, however, said the opinions expressed in the article are those of the authors and do not represent the views of the central bank.