Shaktikanta Das.Governor,RBI
RBI Governor Shaktikanta Das said that real GDP for FY23 is seen at 7.2%, and that for Q1 at 16.2%, Q2 at 6.2%, Q3 at 4.1%, and Q4 at 4%.
The inflation projection for the current financial year is seen at 6.7% and for Q1 at 7.5%, Q2 at 7.4%, Q3 at 6.2%, and Q4 at 5.8%, Das said
MUMBAI:
The Reserve Bank of India’s(RBI) key interest rate was raised by 50 basis points on Wednesday as widely expected, in the second hike in as many months, in a bid to curb persistently high inflation.
The monetary policy committee (MPC) raised the key lending rate or the repo rate by 50 basis points (bps) to 4.90%.
The Standing Deposit Facility rate and the Marginal Standing Facility Rate were accordingly adjusted higher by the same quantum to 4.65% and 5.15%, respectively.
Last month, RBI raised the repo rate or short term lending rate by 40 basis points in an off-cycle monetary policy review to check spiralling inflation.
RBI Governor Shaktikanta Das said that real GDP for FY23 is seen at 7.2%, and that for Q1 at 16.2%, Q2 at 6.2%, Q3 at 4.1%, and Q4 at 4%. The inflation projection for the current financial year is seen at 6.7% and for Q1 at 7.5%, Q2 at 7.4%, Q3 at 6.2%, and Q4 at 5.8%, Das said.
Das said that almost 75 per cent of the increase in inflation projections can be attributed to food prices.The RBI revised the inflation projection upwards to 6.7 per cent from its earlier estimate of 5.7 per cent owing to intensifying cost pressures due to the supply side disruptions caused by the Russia-Ukraine war.
He said that barring prices of tomato, largely the inflation has been driven by the war in Europe.
“Food inflation pressures accentuated, led by cereals, milk, fruits, vegetables, spices and prepared meals. Fuel inflation was driven up by a rise in LPG and kerosene prices. Core inflation (i.e., CPI excluding food and fuel) hardened across almost all components, dominated by the transport and communication sub-group,” the RBI said in its statement.
Das had said a June 8 move was a “no brainer”. But analysts polled by Reuters had been divided over how much it would hike, with forecasts ranging between 25 and 75 bps. read more
Analysts also expect the RBI to reduce liquidity, reinforcing its fight against inflation and extending its effort to return monetary conditions to what they were like before the COVID-19 pandemic prompted radical action to stimulate the economy.
Meanwhile, the World Bank on Tuesday cut India’s economic growth forecast for the current fiscal to 7.5 per cent as rising inflation, supply chain disruptions and geopolitical tensions taper recovery.
This is the second time that the World Bank has revised its GDP growth forecast for India in the current fiscal 2022-23 (April 2022 to March 2023). In April, it had trimmed the forecast from 8.7 per cent to 8 per cent and now it is projected at 7.5 per cent.
The GDP growth compares to an 8.7 per cent expansion in the previous 2021-22 fiscal.
“In India, growth is forecast to edge down to 7.5 percent in the fiscal year 2022/23, with headwinds from rising inflation, supply chain disruptions, and geopolitical tensions offsetting buoyancy in the recovery of services consumption from the pandemic,” the World Bank said in its latest issue of the Global Economic Prospects.
The World Bank on Tuesday cut India’s economic growth forecast for the current fiscal to 7.5 per cent as rising inflation, supply chain disruptions and geopolitical tensions taper recovery.
This is the second time that the World Bank has revised its GDP growth forecast for India in the current fiscal 2022-23 (April 2022 to March 2023). In April, it had trimmed the forecast from 8.7 per cent to 8 per cent and now it is projected at 7.5 per cent.
The GDP growth compares to an 8.7 per cent expansion in the previous 2021-22 fiscal.
“In India, growth is forecast to edge down to 7.5 percent in the fiscal year 2022/23, with headwinds from rising inflation, supply chain disruptions, and geopolitical tensions offsetting buoyancy in the recovery of services consumption from the pandemic,” the World Bank said in its latest issue of the Global Economic Prospects.
Growth, it said, will also be supported by fixed investment undertaken by the private sector and by the government, which has introduced incentives and reforms to improve the business climate. This forecast reflects a 1.2 percentage point downward revision of growth from the January projection, the bank added.
“Growth is expected to slow further to 7.1 percent in 2023-24 back towards its longer-run potential,” it noted.
A rise in prices across all items from fuel to vegetables and cooking oil pushed WPI or wholesale price-based inflation to a record high of 15.08 per cent in April and retail inflation to a near eight-year high of 7.79 per cent.
Prior to the World Bank’s action, global rating agencies too had slashed India’s economic growth forecast. Last month, Moody’s Investors Service trimmed the GDP projection to 8.8 per cent for the calendar year 2022 from 9.1 per cent earlier, citing high inflation.
S&P Global Ratings too had cut India’s growth projection for 2022-23 to 7.3 per cent, from 7.8 per cent earlier, on rising inflation and longer-than-expected Russia-Ukraine conflict.
In March, Fitch had cut India’s growth forecast to 8.5 per cent, from 10.3 per cent, while IMF has lowered the projection to 8.2 per cent from 9 per cent.
Asian Development Bank (ADB) has pegged India’s growth at 7.5 per cent, while RBI in April cut the forecast to 7.2 per cent from 7.8 per cent amid volatile crude oil prices and supply chain disruptions due to the ongoing Russia-Ukraine war.
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