The Reserve Bank of India (RBI), on Friday, has trimmed the economic growth or GDP projection for the freshly started fiscal 2022-23 to 7.2 percent from 7.8 percent, as estimated earlier, keeping in mind– the volatility in crude oil prices and shock to the supply chain which the ongoing Russia-Ukraine war has given.
RBI Governor Shaktikanta Das, in the launch of the first bi-monthly monetary policy report of the current fiscal, said external developments over the two months have resulted in the materialization of negative risks to domestic growth and upside risks to inflation.
“…real GDP growth for 2022-23 is now projected at 7.2 percent with the first quarter of 2022-23 at 16.2 percent, the second quarter at 6.2 percent, the third quarter at 4.1 percent, and the fourth quarter at 4 percent, assuming crude oil (Indian basket) at $100 per barrel during 2022-23,” Mr. Das said, adding that the Indian economy is recovering from the contraction brought by the pandemic.
The Economic Survey, prepared by the principal economic adviser and other officials this time, projected a growth rate of 8-8.5 percent for FY23.
The RBI Governor said with the restriction easing out, the domestic air passenger traffic saw a rebound 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.”
Inflation:
Economists surveyed by the Reserve Bank in March 2022 expected the CPI ( Consumer Price Index) Inflation to lower to 5.8% in the first quarter of the financial year from 6.1 percent in Q4 FY22. On average, annual CPI inflation is expected to be 5.7 percent in 2022-23.
For the second quarter of the current fiscal, GDP is expected to inch up to 5.9 percent, and fall subsequently to 5.4 percent in Q3 and 5.2 percent in Q4.
The estimations, on the other hand, remain close to the RBI’s inflation target, although household estimates appear to be sensitive to inflationary pressure in food prices.
The Reserve Bank of India held the benchmark interest rate at 4% on Friday.