Reserve Bank of India Governor Sanjay Malhotra on Wednesday said that the central bank has retained its real GDP growth forecast at 7.1 per cent for the current financial year.
Moreover, Malhotra projected quarterly growth of 7.2 per cent in Q2, 6.9 per cent in Q3 and 6.8 per cent in Q4.
The GDP growth of 7.1 per cent for Q1 of the next financial year indicates confidence in the economy’s resilience despite an uncertain global backdrop.
“Domestic economic activity exhibited resilience amidst global headwinds, as evident from real GDP growth of 7.8 per cent in Q1,” the governor said.
The RBI further noted that business activity remains on an expansion path with both manufacturing and services Purchasing Managers’ Index (PMI) readings staying in growth territory during the second quarter, although the pace moderated from the previous quarter.
On inflation, Malhotra said food price pressures have become broader in nature, with significant increases witnessed in items such as sugar and onion. He added that food and fuel inflation edged higher in August, largely due to adverse base effects.
The governor said the central bank monitors a range of indicators, including inflation expectations, firm-level pricing behaviour, core inflation trends and diffusion indices, to assess the extent of inflationary pressures across the economy.
In addition, the RBI also adjusted the Standing Deposit Facility (SDF) rate to 5.25 per cent, while the Marginal Standing Facility (MSF) rate and Bank Rate were raised to 5.75 per cent.
Highlighting external risks, Malhotra said global inflation is expected to rise sharply, prompting monetary tightening by major central banks worldwide.
