RBI lowers GDP growth to 5.7%

The GDP growth for the current fiscal has been fixed lower by the Reserve Bank of India’s professional forecaster’s survey. From the earlier estimation of 6% it has now been fixed as 5.7%.
Forecast by RBI:

  • The growth is expected to rise further to 6.5% in 2014-15.
  • The bank credit growth forecast for 2013-14 has also been revised downward to 15 % from 16 %.
  • For money supply has been revised downwards in 2013-14 to 13%  from 14.6 %.
  • Agricultural prospects for 2013-14 are encouraging given the good monsoon so far.
  • Revival in mining and manufacturing will take some more time but some improvement can be seen.

Inflation and Risk:

  • RBI revised the inflation target to 5.3 % from the earlier target of 6.5 %.
  • Average WPI inflation is expected to moderate to 5.3 % during 2013-14.
  • The rupee depreciation of about 9 % in Q1 of 2013-14 is likely to put pressure on domestic inflation.
  • Fuel under-recoveries have raised sharply due to the exchange rate depreciation and domestic price rigidities.
  • Businesses have weakened but signs are there that the downturn can be contained.



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