381460452637Money-Growth-shutterstock_113284591.jpg 
As per the RBI surveys, consumer confidence is improving and households’ optimism in outlook for the year ahead has strengthened with an uptick in sentiments
Photo Credit :
The Reserve Bank of India (RBI) on Friday slashed its economic growth projection to 7.2 per cent for the current fiscal from an earlier estimation of 7.8 per cent due to fluctuating crude oil prices and supply chain disruptions amid the ongoing war between Russia and Ukraine.
As the horizon was brightening up, escalating geopolitical tensions have cast a shadow on our economic outlook. Although India’s direct trade exposure to countries at the epicentre of the conflict is limited, the war could potentially impede economic recovery through elevated commodity prices and global spillover channels," said RBI Governor Shaktikanta Das while unveiling the first bi-monthly monetary policy review.
Further, financial market volatility induced by monetary policy normalisation in advanced economies renewed Covid-19 infections in some major countries with augmented supply-side disruptions and protracted shortages of critical inputs, such as semi-conductors and chips, pose downside risks to the outlook.
He said, "Taking all these factors into consideration, real GDP growth for 2022-23 is now projected at 7.2 per cent with Q1:2022-23 at 16.2 per cent; Q2 at 6.2 per cent; Q3 at 4.1 per cent; and Q4 at 4.0 per cent, assuming crude oil (Indian basket) at USD 100 per barrel during 2022-23."
Das believes that robust Rabi output should support recovery in rural demand, while a pick-up in contact-intensive services should help in further strengthening urban demand. Investment activity may gain traction with improving business confidence, pick up in bank credit, continuing support from government capex and congenial financial conditions.
"Capacity utilisation (CU) in the manufacturing sector recovered further to 72.4 per cent in Q3:2021-22 from 68.3 per cent in the previous quarter, surpassing the pre-pandemic level of 69.9 per cent in Q4:2019-20," he said.
Meanwhile, according to the second advance estimate released by the National Statistical Office (NSO) on February 28, 2022, real GDP rose by 8.9 per cent in 2021-22.
However, as per the RBI surveys, consumer confidence is improving and households’ optimism in outlook for the year ahead has strengthened with an uptick in sentiments. Business confidence is in the optimistic territory and supportive of revival in economic activity.