Reserve Bank of India Projects 7.8%  GDP Growth for FY 2022-23

The Reserve Bank of India has set the economic growth rate for 2022-23 at 7.8%, down from 9.2% predicted in 2021-22, due to uncertainty surrounding the pandemic and rising global commodity prices, according to RBI governor Shaktikanta Das.

The RBI’s growth forecast for the coming fiscal year is lower than the Finance Ministry’s forecast of 8-8.5 percent in the latest Economic Survey, which was submitted in Parliament earlier this month.

“Recovery in domestic economic activity is yet to be broad-based, as private consumption and contact-intensive services remain below pre-pandemic levels,” RBI Governor Shaktikanta Das said when unveiling the bi-monthly policy.

He noted that the Union Budget 2022-23‘s plans to expand public infrastructure through increased capital expenditure are projected to boost growth and draw in private investment through strong multiplier effects.

“Downside risks to the outlook include global financial market volatility, rising international commodity prices, particularly crude oil, and continued global supply-side disruptions,” he added.

Overall, he believes, there is a loss of near-term growth momentum as global variables deteriorate.

“Domestic growth drivers are gradually improving in the future. Taking all of these factors into account, real GDP growth is expected to be 7.8% in 2022-23, with 17.2% in Q1, 7.0 percent in Q2, 4.3 percent in Q3, and 4.5 percent in Q4 “he stated

The National Statistical Office (NSO) announced its first advance projections of national income on January 7, 2022, putting India’s real gross domestic product (GDP) growth for 2021-22 at 9.2%, above the pre-pandemic level (2019-20).

“Except for private consumption, all major components of GDP exceeded their 2019-20 levels. The NSO reduced real GDP growth for 2020-21 to (-) 6.6 percent from provisional forecasts of (-) 7.3 percent in its January 31 report “he stated

According to him, available high frequency indications predict a weakening of demand in January 2022, owing to the drag on contact-intensive services caused by the rapid spread of the Omicron type of coronavirus across the country.

Rural demand indicators – two-wheeler and tractor sales – contracted in December-January, he said, adding, area sown under Rabi crops up to February 4, 2022 was higher by 1.5 per cent over the previous year.

He stated that among the urban demand indices, consumer durables and passenger vehicle sales fell in November-December due to supply restrictions, while domestic air traffic fell in January due to Omicron.

While capital goods imports surged in December, capital goods production decreased on a year-over-year (y-o-y) basis in November.

In January 2022, merchandise exports remained strong for the 11th month in a row; non-oil, non-gold imports also increased due to domestic demand.

The bi-monthly policy was announced against the backdrop of the Budget, which forecasted a nominal GDP of 11.1 percent for 2022-23. According to the Economic Survey, economic growth will be between 8% and 8.5 percent in the coming fiscal year.

The government anticipates this expansion to be fueled by a huge capital spending programme proposed in the Budget, with the goal of attracting private investment by reviving economic activity and boosting demand.