RBI MPC Meeting: Central Bank Retains Economic Growth Forecast At 6.5 Per Cent This Fiscal

RBI's monetary policy committee headed by Governor Shaktikanta Das on Friday announced to keep policy rate unchanged at 6.5 per cent

The GDP growth forecast for October-December 2023 left unchanged at 6.0 per cent, for January-March 2024 left unchanged at 5.7 per cent.

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The Reserve Bank of India (RBI) on Friday said India is poised to become the growth engine of the world as it retained the GDP projection for the current fiscal at 6.5 per cent. Governor Shaktikanta Das, while unveiling the bi-monthly monetary policy review, said the domestic economy exhibits resilience on the back of strong demand.

The economic growth in the current year is expected to be at 6.5 per cent with risks evenly balanced, he said. The projection is the same as was estimated in the August monetary policy. The RBI continued to maintain status quo in the key policy rate and retained the repo rate at 6.5 per cent for the fourth time in a row. 

Das said, "Taking all factors into consideration, Real GDP Growth for the current financial year 2023-23 is projected at 6.5 per cent...The risks are evenly balanced. Real GDP Growth for the first quarter of next financial year 2024-25 is projected at 6.6 per cent." The GDP growth forecast for October-December 2023 left unchanged at 6.0 per cent, for January-March 2024 left unchanged at 5.7 per cent.

On the inflation part, the governor during his address said significant easing of inflation is expected in September. "But indications are that throughout October-December 2023, food inflation may not see sustained easing. This requires careful monitoring incoming data and the outlook," he said. He said appropriate and timely action is needed to prevent any spillovers from food and fuel price shocks. These are non-negotiable necessities. 

The CPI inflation forecast for April-June 2024 also left unchanged at 6.6 per cent, the governor said during his speech. The CPI inflation forecast for July-September 2023 raised to 6.4 per cent from 6.2 per cent; for October-December 2023 cut to 5.6 per cent from 5.7 per cent; for January-March 2024 left unchanged at 5.2 per cent; forecast for April-June 2024 left unchanged at 5.2 per cent.

The central bank also announced that it was was withdrawing its incremental cash reserve ratio (ICRR), which was introduced in August to withdraw surplus liquidity from the system in a phased manner. Also the MPC also decided that Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) rates are also left unchanged at 6.25 percent and 6.75 percent, respectively.