RBI pegs GDP growth at 7.2% for current financial year

The Reserve Bank of India ( RBI ) has pegged economic growth of 7.2 per cent for current financial year with gross domestic product ( GDP ) growth for Q2 at 7 per cent, Q3 at 7.4 per cent and Q4 at 7.4 per cent.

The Reserve Bank of India's Monetary Policy Committee (MPC) by a majority of five out of six members decided to keep the repo rate unchanged at 6.50 per cent for tenth time in a row. The MPC however, unanimously decided to change its policy stance to 'neutral' from 'accommodation'.

"Monetary Policy stance was changed to neutral to remain unambiguously focused on durable alignment of inflation with the target while supporting growth," RBI Governor Shaktikanta Das while reading out policy statement.

Governor Das emphasised that the flexible inflation target framework has served the country well in navigating economic challenges.

The Monetary Policy Committee (MPC) noted, "Headline inflation is on a downward trajectory," while also acknowledging that moderation may occur, albeit with potential elevation due to a higher base.

Governor Das mentioned that food inflation could see some easing, supported by strong kharif crops, although he cautioned that adverse weather conditions continue to pose risks.

Regarding the overall economic landscape, he remarked, "The global economy remains resilient," despite facing geopolitical risks and elevated public debt that present downside risks. However, service activity remains robust, and inflation is showing signs of softening.