RBI Monetary Policy: Central Bank Revises FY23 Economic Growth, Pegs It At 7.2 Per Cent

RBI Governor Shaktikanta Das said external developments during the past two months have led to the materialisation of downside risks to domestic growth and upside risks to inflation

New Delhi: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Friday slashed economic growth projection to 7.2 per cent for the current fiscal year (FY23) from 7.8 per cent estimated earlier amid volatile crude oil prices and supply chain disruptions due to the ongoing Russia-Ukraine conflict.

RBI Governor Shaktikanta Das, while unveiling the first bi-monthly monetary policy review of the current financial year (FY23), said external developments during the past two months have led to the materialisation of downside risks to domestic growth and upside risks to inflation.

Das on Friday announced that the MPC voted unanimously to keep repo rates unchanged at 4 per cent after conclusion of its three-day meeting. Reverse repo rate was kept unchanged at 3.35 per cent.

During announcement, the governor said, “Real GDP growth for 2022-23 is now projected at 7.2 per cent with first quarter of 2022-23 at 16.2 per cent, second quarter at 6.2 per cent, third quarter at 4.1 per cent and fourth quarter at 4 per cent, assuming crude oil (Indian basket) at $100 per barrel during 2022-23,” while adding that the Indian economy is steadily reviving 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 year.

The RBI Governor said that with the easing of restrictions, domestic air passenger traffic rebounded in March.

“According to our surveys, consumer confidence is improving and households' optimism in outlook for the year ahead has strengthened with an uptick in sentiments.” He said the business confidence is in the optimistic territory and supportive of revival in economic activity.

He also said that inflation is expected to rise to 5.7 per cent from 4.5 per cent projected earlier for FY23.

Going forward, robust rabi (winter crop) output should support recovery in rural demand, while a pick-up in contact-intensive services should help in further strengthening urban demand, he added.