The Reserve Bank of India (RBI) has maintained its GDP growth projection for the fiscal year 2023-24 at 6.5%, with Governor Shaktikanta Das noting that the Indian economy and financial sector remain resilient amidst global challenges.

The RBI’s Monetary Policy Committee (MPC) anticipates that growth will fluctuate throughout the year, with an expected surge to 8% in the first quarter before tapering off to 5.7% by the final quarter. These projections suggest a robust start to the fiscal year followed by a gradual slowdown.

In a vote of confidence for the nation’s economy, Mr Das said, “Indian economy and financial sector stand strong and resilient amidst unprecedented global headwinds.” This optimism is reflected in the central bank’s decision to keep the repo rate unchanged at 6.5%, reinforcing the stability of the nation’s monetary policy.

The MPC is focusing its efforts on the withdrawal of accommodation of policy stance, indicating a possible tightening of monetary policy in response to inflation concerns. “Close and continued vigil on evolving inflation is absolutely necessary,” stated Governor Das, signalling the central bank’s commitment to maintaining price stability.

The RBI revised its retail inflation projection for FY’24 downwards to 5.1% from an earlier estimate of 5.2%. Despite this slight decrease, the Governor emphasized that headline inflation is above the RBI’s target of 4% and is expected to remain so for the rest of the year.

The Governor also offered a cautious note on global economic activity. “The pace of global economic activity to decelerate due to the geopolitical situation,” said Das, highlighting the potential challenges that lay ahead.

The RBI’s forward guidance underscores the delicate balance the central bank faces in navigating economic growth and inflation risks. It will continue to closely monitor the evolving economic landscape and make adjustments as necessary to preserve stability in the Indian financial system.