The inflation forecast for this fiscal year (FY24) was cut to 5.2 per cent from the 5.3 per cent forecast in the February policy. Meanwhile, the MPC projected India’s real GDP to grow at 6.5 per cent in FY24.
Governor Das said the repo rate has been kept unchanged on the basis of macroeconomic and financial conditions. He also clarified that the decision to pause on the rate is for this (April) meeting only. “Monetary Policy Committee will not hesitate to take any action in future,” said Das.
“The year 2023 began on promising note as supply conditions were improving, economic activity remained resilient, financial markets exuded greater optimism and central banks were steering their economies towards a soft landing. In just about a few weeks in the month of March, this narrative has undergone a dramatic shift. The global economy is now witnessing a renewed phase of turbulence with fresh headwinds from the banking sector turmoil in some advanced economies,” he said, while announcing the outcome of the 3-day MPC meet.
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Here are the key decisions announced:
- The policy repo rate under the liquidity adjustment facility (LAF) was kept unchanged at 6.50 per cent.
- The standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.
- The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.
- The CPI inflation is projected at 5.2 per cent for 2023-24, with Q1 at 5.1 per cent, Q2 at 5.4 per cent, Q3 at 5.4 per cent and Q4 at 5.2 per cent, and risks evenly balanced.
- Real GDP growth for 2023-24 is projected at 6.5 per cent with Q1FY24 at 7.8 per cent; Q2 at 6.2 per cent; Q3 at 6.1 per cent; and Q4 at 5.9 per cent, with risks evenly balanced.
- The RBI’s MPC proposed to permit banks with IFSC Banking Units (IBUs) to offer non-deliverable foreign exchange derivative contracts (NDDCs) involving INR to resident users in the onshore market. The measure is aimed at deepening the forex market.
- RBI introduced a secured web-based centralised portal named as ‘PRAVAAH’ (Platform for Regulatory Application, Validation And Authorisation) to simplify and streamline processes for entities to make applications seeking license/authorisation or regulatory approvals from the central bank.
- In order to improve and widen the access of depositors/beneficiaries to information on unclaimed deposits, the RBI has decided to develop a web portal to enable search across multiple banks for possible unclaimed deposits.
- The RBI has proposed to expand the scope of UPI by permitting operation of pre-sanctioned credit lines at banks through the UPI.
The next meeting of the MPC is scheduled during June 6-8, 2023.