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GDP to grow at 6.1-6.3 per cent in Q2 on supply strength: RBI report

Last week, RBI Governor Shaktikanta Das said that the country’s economy will grow by about 7 per cent in the current year, helped by strong macroeconomic fundamentals and a stable financial sector.

GDP growth, GDP growth rate, RBI, RBI report, Shaktikanta Das, Reserve Bank of India, Business news, Indian express, Current AffairsThe report has been authored by 26 RBI officials, including deputy governor Michael Patra. The views expressed in the report are of the authors and not of the institution, the report said.

The country’s gross domestic product (GDP) is likely to grow between 6.1-6.3 per cent in the September quarter and may expand by 7 per cent in the fiscal 2022-23, RBI said in its monthly report. The GDP estimate for July-September quarter will be released on November 30. During the April-July period, the economy grew by 13.5 per cent.

“Based on high frequency indicators, our nowcasting and full information models peg real GDP growth in Q2 between 6.1 and 6.3 per cent. If this is realised, India is on course for a growth rate of about 7 per cent in 2022-23,” RBI said in its ‘State of the economy’ report. In the third quarter, supply responses in the economy are gaining strength, it said.

Last week, RBI Governor Shaktikanta Das said that the country’s economy will grow by about 7 per cent in the current year, helped by strong macroeconomic fundamentals and a stable financial sector.

The report has been authored by 26 RBI officials, including deputy governor Michael Patra. The views expressed in the report are of the authors and not of the institution, the report said.

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It said with headline inflation beginning to show signs of easing, the domestic macroeconomic outlook can best be characterised as resilient but sensitive to formidable global headwinds. The headline CPI inflation eased to 6.77 per cent in October after rising to a five-month high of 7.41 per cent in September.

“Urban demand appears robust, rural demand is muted but more recently picking up traction,” it said.

On the financial sector, the report said the system liquidity is normalising in consonance with the stance of monetary policy but it is still in surplus mode, with the Reserve Bank absorbing about Rs 1.5 lakh crore on a daily basis on average. The effective absorption rate rose by 1.75 percentage points between end-April and mid-November in response to monetary policy actions. In the first 11 days of November, net inflows of portfolio investment have more than doubled over the level for the full month of October inflow. Even the yield on the 10-year G-sec benchmark traded on a soft note in October and November in relation to its peak in mid-June.
Commercial bank credit growth has been surging, led by services, personal loans, agriculture and industry, in that order, the report said. The latest RBI data showed that bank credit grew by 18 per cent and deposits by 9.45 per cent in the fortnight ended October 21.

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The report said the banking system is well-capitalised, with capital ratios for the system well above 16 per cent of total risk-weighted assets. On asset quality, the report said banks gross non-performing assets (GNPAs) have consistently declined, with net NPAs sliding down towards 1 per cent of total assets.

First published on: 19-11-2022 at 04:48 IST
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