While maintaining an accommodative stance, the Reserve Bank of India (RBI) on Friday cut the real Gross Domestic Product (GDP) growth projection for the current Financial Year 2022-23 to 7.2 per cent, against the earlier projection of 7.8 per cent.
The inflation forecast has also been hiked from 4.5 per cent to 5.7 per cent for the FY 2022-23.
RBI Governor Shaktikanta Das, in his Monetary Policy Statement, said, “Real GDP growth for the year 2022-23 is now projected at 7.2 per cent; with Quarter 1 of FY 2022-23 at 16.2 per cent, Quarter 2 at 6.2 per cent, Quarter 3 at 4.1 per cent and Quarter 4 at 4 per cent.”
The inflation, projected at 5.7 per cent in 2022-23, is seen averaging 6.3 per cent in Q1, 5 per cent in Q2, 5.4 per cent in Q3 and 5.1 per cent in Q4.
“Given the excessive volatility in global crude oil prices since late February, and the extreme uncertainty over the evolving geopolitical tensions, any projection of growth and inflation is fraught with risk and is largely contingent upon future oil and commodity price developments,” the RBI Governor said while informing the change in the projection.
The projections were revised assuming that crude oil would be in the Indian basket at USD 100 per barrel during the year 2020-23.
Meanwhile, as per the Second Advance Estimates released by the National Statistics Office on February 28, the Real GDP rose by 8.9 per cent in 2021-22.
“Private consumption and fixed investment, however, remain subdued with these two components being only 1.2 per cent and 2 per cent respectively, above their pre-pandemic levels,” Das said.
Other than keeping the interest rate unchanged at 4 per cent, the Reserve Bank has decided to restore the width of liquidity adjustment facilities, i.e. LAF corridor to 50 basis points – the position that prevailed before the pandemic. This has been done to “ensure liquidity”.
Das also informed that the Foreign exchange reserves of India are at a very comfortable level.