India’s real gross domestic product (GDP) growth projection for the financial year 2022-23 is retained at 7.2 percent, Reserve Bank of India’s (RBI) governor Shaktikanta Das
India’s real gross domestic product (GDP) growth projection for the financial year 2022-23 is retained at 7.2 percent, Reserve Bank of India’s (RBI) governor Shaktikanta Das said as he announced the decisions of the central bank’s Monetary Policy Committee on Friday.
Das said the Indian economy has naturally been impacted by the global economic situation and is grappling with the problem of high inflation while financial markets remain uneasy despite intermittent corrections.
However, RBI MPC noted that domestic economic activity is resilient and progressing broadly along the lines of MPC's June resolution.
Even as the domestic economy faces headwinds from global forces, the RBI governor noted economic activity in the country is exhibiting signs of broadening, investment activity is picking up, bank credit growth has accelerated, and there is good progress of monsoon as a result of which Kharif sowing will support rural consumption.
He noted that urban consumption is also expected to benefit from the demand for contact-intensive services and improve consumer optimism.
The governor added that the consumer price index (CPI) inflation has eased from its surge in April but remains above the target's upper threshold.
RBI governor pointed out that the inflation trajectory continues to be heavily dependent on geopolitical developments, commodity market dynamics, global financial markets and the distribution of the southwest monsoon. Hence, inflation is pegged at 6.7 percent in 2022-23, he said.
According to him, MPC stressed that sustained high inflation could destabilise inflation expectations and harm growth in the medium term. The panel accordingly decided to increase key lending rate i.e repo rate — the rate at which the central bank lends to other banks—by 50 basis points to 5.4 percent and remain focused on the withdrawal of accommodation, Das said.
First Published: IST