RBI revises economic growth downwards, pegs it at 7.2% for FY23

The RBI revised downwards India's growth projection for the current fiscal (FY2022-23) to 7.2% per cent from its earlier estimate of 7.8 per cent on the back of hardening of prices of commodities and tightening of interest rates globally.

The RBI has assumed crude oil prices at $100 per barrel for 2022-23 to arrive at the growth estimation. It also revised its inflation forecast upwards for FY23 to 5.7%.

The RBI, which has been stubbornly pro-growth, kept interest rates unchanged in the first monetary policy review of the current financial year. The stance has also been kept accommodative and any changes are expected only in the June policy review.

Economists and other agencies have also pared their growth estimates for FY2022-23 because of surging oil prices.

Ratings agency Ind-Ra also revised its growth projections for the current fiscal downwards to 7-7.2% from 7.6% earlier on the back of rapidly changing geo-political environment as the Russia-Ukraine war prolongs.

The Ministry of Finance, in its monthly economic review, has warned of twin challenges of soaring commodity prices and a supply-side disruption due to protracted conflict between Russia and Ukraine.

The ministry said that this may result in growth getting impacted amid prices remaining elevated.

The report further stated that the government is exploring all options to diverisfy its import of crude oil to keep the prices in check.