RBI projects 7% GDP growth for FY23, Inflation remained 6.7%

RBI projects 7% GDP growth for FY23, Inflation remain 6.7%

RBI projects 7% GDP growth for FY23: The Reserve Bank of India (RBI) has projected 7% GDP growth for the Financial year 2023 (FY23). Inflation in India is predicted to remain 6.7%.

RBI projects 7% GDP growth for FY23: The Reserve Bank of India (RBI) has projected 7% real GDP growth for the Financial year 2023 (FY23). Inflation in India is predicted to remain 6.7%. As a result, RBI raised its policy rate by 50 basis points (bps) in response to growing concerns about increasing inflation, global headwinds, and a drop in the value of the rupee to historic lows.

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RBI projects 7% GDP growth for FY23: Key Points

The Monetary Policy Committee (MPC) opted to lower its real GDP prediction for FY23 to 7.0% at its meeting in September; growth is projected for Q2FY23 to be 6.3%, Q3 to be 4.6%, and Q4 to be 4.6%, with risks largely balanced. 7.2% growth has been corrected for Q1FY24.
The government has given the central bank the responsibility of ensuring that the consumer price index (CPI) stays at 4% with a margin of 2% on either side, but since January, retail inflation has stubbornly remained over the RBI’s comfort level.
As per the most recent data, inflation in August was 7%.
The Indian rupee is rapidly losing value relative to the US dollar, which is presently trading at around 82. While inflation is still high.
The US Fed recently increased its interest rate three times by 75 basis points each, hastening the depreciation of the rupee.
Other significant central banks have also accelerated rate increases.
From a peak of $642 billion a year ago, forex have decreased by by $100 billion, to $545 billion, and are predicted to decline even further.

Also Read: What is Repo Rate and Reverse Repo Rate in India?

Monetary Policy Committee (MPC) trying to reduce Inflationary Pressures

The MPC’s decision to raise the policy rate is an effort to reduce the high inflationary pressures that the public is experiencing as a result of rising food (especially cereal) prices due to supply disruptions brought on by Russia’s invasion of Ukraine, which has caused a trade imbalance.
In addition, uneven rainfall distribution may have an additional impact on the prices of staple food items.
The falling rupee, which recently hit an all-time low and increased imported inflation, also contributed to this rise.
Last Friday, the US Federal Reserve raised interest rates by 75 basis points for the third time in a row.
In addition, despite the economy entering a recession, the Bank of England increased its benchmark interest rate from 1.75% to 2.25% and stated that it will continue to “act strongly, as necessary” to inflation.

To see, Other Previous Predictions by Various Agencies, read:

RBI Governor on Performance of Indian Currency

The Indian Currency, Rupee has performed better than many other currencies this year, depreciating about 7.4% this year as of September 28.
According to Das, the RBI does not set the exchange rate for the rupee and intervenes in the market to reduce excessive volatility while maintaining a robust “umbrella” of FX reserves.

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