Economy: RBI hikes FY24 GDP estimate from 6.5% to 7%
Virendra Pandit
New Delhi: After several leading global rating agencies’ positive outlook in recent weeks, the Reserve Bank of India (RBI) also raised the South Asian country’s GDP estimates from 6.5 percent earlier to 7 percent in the financial year 2023-24 on buoyant domestic demand and higher capacity utilization in the manufacturing sector.
After its quarterly Monetary Policy Committee (MPC) meeting in Mumbai on Friday, the central bank, however, kept the repo rate unchanged at 6.5 percent for the fifth time in a row.
The MPC also kept the FY24 inflation forecast unchanged at 5.4 percent, RBI Governor Shaktikanta Das said.
Announcing the policy, he said the MPC took these decisions unanimously. Notably, 5 out of 6 MPC members voted in favor of withdrawal of accommodation.
Das also said that with a majority of 5-1, the MPC decided to maintain the “withdrawal of accommodation” stance. He, however, cautioned that the near-term forecast remains uncertain because of food inflation, which may cause an uptick in headline inflation figures in November and December.
The RBI MPC has kept the repo rate unchanged since April. It raised the repo rate by a total of 250 basis points (bps) between May 2022 and February 2023 to cool surging inflation, which dropped to a four-month low of 4.87 percent in October this year.
The RBI chief also said for the third quarter of the current financial year (Q3FY24), the GDP projection has been hiked from 6 percent to 6.5 percent and from 5.7 percent to 6 percent in Q4FY24.
The GDP projection for Q1FY25 has been hiked from 6.6 percent to 6.7 percent and for Q2FY25 and Q3FY25, retained at 6.5 percent and 6.4 percent, respectively.
Das said the assumption of a status quo as a neutral stance is not correct. The monetary policy continues to be actively disinflationary. Given the uncertainties, RBI refuses to give any forward guidance on the interest rate trajectory.
The CPI for November is expected to be high, he added.
