RBI keeps FY23 GDP forecast unchanged at 7.2%

Mumbai: The Reserve Bank of India (RBI) on Wednesday retained its GDP growth forecast at 7.2 for the current fiscal, but cautioned against negative spillovers of geo-political tensions and a slowdown in the global economy.

Announcing the third monetary policy of 2022-23, RBI Governor Shaktikanta Das said the available information for April and May 2022 indicates that the recovery in domestic economic activity remains firm, with growth impulses getting increasingly broad-based. Manufacturing and services purchasing managers' indices (PMIs) for May point towards further expansion of activity.

This is also corroborated by the movements in railway freight and port traffic, domestic air traffic, GST collections, steel consumption, cement production and bank credit. While urban demand is recovering, rural demand is gradually improving, Das said. "Looking ahead, real GDP is expected to broadly evolve on the lines of the April 2022 MPC resolution. The forecast of normal south-west monsoon should boost kharif sowing and agricultural output. "This will support rural consumption. The rebound in contact-intensive services is expected to sustain urban consumption," he said.

Nevertheless, Das noted that the negative spillovers from geopolitical tensions; elevated international commodity prices; rising input costs; tightening of global financial conditions; and a slowdown in the world economy continue to weigh on the outlook.

CAD will remain at sustainable level

Mumbai: The current account deficit (CAD) will remain at a sustainable level and the normal flows will help the Reserve Bank of India (RBI) to finance it, Governor Shaktikanta Das said on Wednesday. He also said the Indian economy is well placed to deal with geopolitical challenges.