RBI MPC meeting: Policy rate unchanged with Real GDP growth for FY24 projected at 6.5%

MUMBAI: At the end of the June 2023 Monetary Policy Committee (MPC) meeting on Thursday, 8th June, the Reserve Bank of India Governor Shaktikanta Das announced that real GDP growth for FY24 has been projected at 6.5% — first quarter at 8% , second quarter at 6.5%, third quarter at 6% and fourth quarterat5.7%.

Domestic demand conditions remain supportive of growth, the Governor said. Rural demand is growing while urban demand remainsresilient,headded.

In the run-up to the MPC's latest meeting, leading forecasters projectedthenumbersintherangeof 5.5% to 6.3% — OECD saw FY24 real GDP at 6%, the World Bank at 6.3%, JPMorganat5.5%andUBSat6.2%.

The MPC, at its meeting, unanimously decided to keep the policy rate unchanged at 6.5 per cent,

Dasannounced.Itwasastatusquoat theprevious(April)too.

The committee also decided to focus on withdrawal of accommodative, with a 5-1 vote in favourofthisstance,Dasinformed.

The MPC in its February meeting hadpeggedrealGDPgrowthforFY24 at 6.4%. The first advance estimate peggedFY23GDPgrowthat7%.

The Indian economy had clocked Q4 GDP print of 6.1% in March quarter (Q4). This stronger-thanexpected performance lifted India's growth to 7.2% in FY23. It exceeded the 7% growth cited in the second advance estimates released in February.

In Q4, GDP growth also increased sequentially from the (revised) 4.5% in the comparable quarter last year. The stellar performance helped India retain its status as the fastestgrowingmajoreconomyintheworld.

The economy had grown 9.1% in FY22. That, however, was on a lower base of a Covid-ravaged FY21. The strong growth makes India the fastest-growing major economy again.

Mr. RajivAgarwal

Mr. Rajiv Agarwal, MD & CEO, Essar Ports in his reaction said, “Today’s announcement of the RBI Monetary Policy is a result of the overall positive outlook of the Indian economy and that the inflation is under control. This reflects that India has decoupled from the rest of the world in terms of inflation and growth rates. We should expect a downward reduction in the rates in coming times.”