RBI lowers GVA growth forecast to 6.7% in line with the brokerage estimates

The Reserve Bank of India (RBI) has lowered its forecast for the gross value added (GVA) growth. It now expects the number to rise 6.7 percent for FY18 versus 7.3 percent earlier.

The central bank has made its intention of shifting from MCLR (marginal cost of funds based lending rate) regime to external benchmarks very clear – hoping that the Indian banking system will get more competitive.

There was no mention of increase in fiscal stimulus and need for monetary tightening to counterbalance that fiscal stimulus in the monetary policy.

RBI’s current growth projections is in line with what the brokerage houses had predicted — ICICI Securities' forecast at 6.8 percent, SBI at 6.4 percent and Credit Suisse at 6.6 percent.

RBI Governor Urjit Patel had hoped that there will be a turnaround in growth in the next two quarters.