RBI MPC: GDP growth projected at 7.2% in 2022-23, says Shaktikanta Das

RBI Governor Shaktikanta Das, during the MPC meeting decision announcements on Friday, said that real GDP for the year 2022-23 is projected at 7.2 per cent. He added that Q1 is expected to have a growth of 16.2 per cent, Q2 6.2 per cent, Q3 4.1 per cent and Q4 4 per cent. Das said that according to NSO’s second advance estimates, real GDP rose by 8.9 per cent in 2021-22.

Private consumption and fixed investment, key drivers of the domestic demand, remained subdued, he said. On the supply side, contact-intensive services still trail the 2019-20 level. Nevertheless the Indian economy is steadily reviving from its pandemic-induced contraction, said Das. 

During 2021-22, weaknesses in economic activity surfaced in the third quarter and got exacerbated by the Omicron variant in January 2022. A gradual turnaround was noticed during February, although a mixed picture was seen in March, said the Governor. 

Some contact-intensive activities have regained traction amid declining infections and removal of restrictions. Several high-frequency indicators, namely railway freight, GST collections, toll collections, electricity demand, fuel consumption, and imports of capital goods posted robust year-on-year expansion during the months of February and March, he added. 

With the easing of restrictions, domestic air passenger traffic rebounded in the month of March, said Governor Das. According to RBI surveys, consumer confidence is improving and households’ optimism in outlook for the year ahead strengthened with an uptick in sentiments, said Das.

Governor Shaktikanta Das said that business confidence is in optimistic territory and is supportive of revival in economic activity. On the other hand, passenger vehicle sales and registrations continue to contract, although at a moderating pace. 

Both manufacturing and services PMI remain in the zone of expansion, he further added. Going forward, robust rabi output should support recovery in rural demand, while a pick-up in contact-intensive services should boost urban demand, said the Governor. 

Investments might gain traction with improving business confidence. 

As the horizon was brightening up, escalating geopolitical tensions have cast a shadow on our economic outlook, he added. The Russia-Ukraine war could impede the economic recovery through elevated commodity prices and global spillover channels. Increasing COVID-19 infections could also pose downside risks to the growth outlook. 

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