India’s GDP Growth for FY 2022-23 Estimated to Exceed 7%, says RBI Governor Shaktikanta Das

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RBI Governor Shaktikanta Das has projected that India’s gross domestic production (GDP) growth for the fiscal year 2022-23 is expected to surpass 7%. Speaking at the CII Annual Conference in New Delhi, Das acknowledged that factors such as inflation and El Nino could potentially impact India’s economic growth. Geopolitical uncertainties and a decline in global trade could also pose downside risks to the country’s growth.

Despite these challenges, Das expressed optimism, stating that the estimates for the recently concluded fiscal year indicate a growth rate of 7% or higher. The official data is set to be released at the end of the month, and Das believes that the growth figure could exceed expectations. He cautioned, however, that the RBI should remain vigilant in addressing inflationary pressures due to potential weather-related uncertainties, particularly with regard to the El Nino phenomenon.

Das emphasized that the battle against inflation is ongoing and called for continued attentiveness, stating, “The war on inflation is not over; we have to remain alert.” India’s annual retail inflation moderated to 4.7% in April from 5.66% in the previous month, and the RBI Governor anticipated a further decline in May’s retail inflation figures, to be released on June 12.

Regarding the stability of the Indian banking system, Das assured that it remains resilient in the face of global uncertainties. He highlighted the system’s strong capital and liquidity positions, improving asset quality, enhanced provisioning coverage, and improved profitability. The RBI will ensure sufficient liquidity availability to meet the economy’s production requirements. These comments came in response to the recent announcement of the withdrawal of Rs 2,000 notes.

Furthermore, Das stated that the RBI will prioritize maintaining the stability of the exchange rate. The central bank aims to be proactive and prudent, providing support to the economy to ensure financial stability. However, he acknowledged the volatility in financial markets due to uncertainties surrounding future monetary policy decisions. He clarified that the decision to pause interest rate hikes depends on the prevailing circumstances.

In April, the RBI Monetary Policy Committee unanimously decided to maintain the key lending rate (repo rate) at 6.50%, with Das underscoring the ongoing fight against inflation. The MPC is scheduled to convene from June 6-8 to determine the central bank’s monetary policy.

Overall, Governor Das’ remarks reflect cautious optimism about India’s economic prospects, with a projected GDP growth rate of over 7% for the fiscal year 2022-23. The RBI remains committed to addressing inflation, ensuring banking system stability, and supporting the economy through adequate liquidity provisions.

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