MPC announcements: RBI projects GDP growth for 2023-24 at 6.5%

RBI Governor Shaktikanta Das in the Monetary Policy Committee meeting announcements projected GDP growth for 2023-24 at 6.5 per cent, which is slightly higher than the previous projection of 6.4 per cent. He further added that Q1 GDP is expected to grow at 7.8 per cent, Q2 at 6.4 per cent, Q3 at 6.1 per cent, and Q4 at 5.9 per cent.

In the previous MPC meeting in February, Governor Das projected 2023-24 growth at 6.4 per cent, with Q1 growth at 7.8 per cent, Q2 at 6.2 per cent, Q3 at 6 per cent and Q4 at 5.8 per cent. The Economic Survey 2023-24, that was released a week prior, also pegged real GDP growth at 6.5 per cent.  

“The higher rabi production has brightened the prospects for agriculture sector and rural demand. The steady growth in contact-intensive services should be positive for urban demand. The government’s focus on capital expenditure, capacity utilisation above long-period average and moderating commodity prices should bolster manufacturing and investment activity. The drag from net external demand may continue due to increased global headwinds. The protracted geopolitical tensions and global financial market volatility pose downside risks to the outlook,” said the Governor during the announcements on Thursday. 

He also said that GDP is expected to have recorded a growth of 7 per cent in 2022-23. “Hence, economic activity remains resilient,” he added. 

The Governor said that the global economy is facing financial challenges in the wake of the recent bank failures. He also stated that the RBI has adopted a prudent approach towards regulations. 

In a rather surprising move, the RBI decided to keep the repo rate unchanged at 6.5 per cent, which was in contrast to what many economists had predicted. The central bank also projected inflation for FY24 to drop to 5.2 per cent from 5.3 per cent projected in the February policy. Inflation for the first quarter has been projected at 5.1 per cent, 5.4 per cent for Q2 and Q3 and 5.2 per cent for Q4. 

Also read: RBI MPC Meet LIVE Updates: Central bank keeps repo rate unchanged at 6.50%, inflation pegged at 5.2% for 2023-24

Also read: RBI MPC Meet 2023: MPC unanimously votes to keep repo rate unchanged at 6.5%