RBI lowers FY23 GDP growth forecast to 7.2 percent from 7.8 percent

The Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday revised India’s Gross Domestic Product (GDP) growth rate to 7.2 percent from February’s 7.8 percent for FY23.

RBI Governor Shaktikanta Das said that the war could potentially impede economic recovery.

“Although India’s direct trade exposure to countries at the epicentre of the conflict is limited, the war could potentially impede the economic recovery through elevated commodity prices and global spillover channels.,” said Shaktikanta Das.

“Taking all these factors into consideration, real GDP growth for 2022-23 is now projected at 7.2 per cent with Q1:2022-23 at 16.2 per cent; Q2 at 6.2 per cent; Q3 at 4.1 per cent; and Q4 at 4.0 per cent, assuming crude oil (Indian basket) at US$ 100 per barrel during 2022-23,” said Shaktikanta Das.

Talking about the excessive volatility in global crude oil prices he said, “It may, however, be noted that 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.”

He further said that on the food price front record Rabi harvest will help to keep domestic prices of cereals and pulses in check.

Governor said that edible oil prices will likely remain elevated in the near-term due to export restrictions by key producers. He further said that Feed cost pressures could have a spill over impact on poultry, milk, and dairy product prices.

“Edible oil price pressures are likely to remain elevated in the near-term due to export restrictions by key producers as well as loss of supply from the Black Sea region. Feed cost pressures could continue due to global supply shortages, which could also have a spillover impact on poultry, milk and dairy product prices,” said Governor.