RBI Governor Shaktikanta Das on Thursday said the Indian economy and the financial sector stand out as resilient, and the Q4 GDP growth was aided by fixed investment and higher exports. He said the real GDP growth for 2023-24 is projected at 6.5 per cent, which is the same as earlier.
Announcing the latest bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Indian economy and the financial sector stand out as resilient. He, however, added that the financial stability concerns persist in advanced economies and the labour market in many countries remains tight.
Das said the economy recorded a growth of 7.2 per cent in 2022-23, which was higher than the 7 per cent estimated earlier. On the FY2023-24 prospects, the RBI governor said domestic demand conditions remain supportive of growth on the back of improving household consumption and investment activity.
He said the real GDP growth for 2023-24 is projected at 6.5 per cent, with Q1 at 8 per cent, Q2 at 6.5 per cent, Q3 at 6 per cent and Q4 at 5.7 per cent, with risks evenly balanced.
On the inflation forecast, the RBI on Thursday also revised downwards CPI inflation projection for FY24 at 5.1 per cent, against 5.2 per cent earlier.
“Domestic economic activity remains resilient in Q1:2023-24 as reflected in high-frequency indicators. Purchasing managers’ indices (PMI) for manufacturing and services indicated sustained expansion, with the manufacturing PMI at a 31-month high in May and services PMI at a 13-year high in April-May. In the services sector, domestic air passenger traffic, e-way bills, toll collections and diesel consumption exhibited buoyancy in April-May, while railway freight and port traffic registered modest growth,” Das said.
On the demand side, he said, urban spending remains robust as reflected in indicators such as passenger vehicle sales and domestic air passenger traffic which recorded double-digit growth in April. Rural demand is gradually improving though unevenly – motorcycle sales expanded in April, while tractor sales contracted partly owing to unseasonal rains.
The RBI MPC on Thursday unanimously decided to keep the key repo rate unchanged at 6.50 per cent, in line with market expectations. The monetary policy stance is maintained at ‘Withdrawal of Accommodation’ with the MPC voting in favour of this in the ratio of 5:1.
The RBI MPC also kept the SDF unchanged at 6.25 per cent, and MSF and Bank Rates maintained at 6.75 per cent. The SDF is the lower band of the interest rate corridor, while the MSF is the upper band.
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