RBI likely to lower GDP growth forecast for FY 23

2 Dec 2022 , 01:29 PM

RBI is expected to lower India’s GDP growth forecast for FY 23. According to some economists, it may reduce GDP growth forecase by 20 basis points or .02% The Central Bank is expected to do so because of the adverse impact of global economic slowdown on the India economy. Successive interest rate hikes by RBI have also played a role in slowing down the economy. Much of it is also because of the hangover of disruptions caused by Covid lockdowns.

A global economic slowdown will further reduce demand for India’s exports. Higher unemployment rate at the domestic front will  have an adverse impact on personal consumption expenditure in both urban and rural areas.  India’s unemployment rate in November stood at more than 8%, according to data from CMIE. Manufacturing activity slowed down in October. Some of this slowdown might be because of successive interest rate hikes of RBI. Increase in interest rates increases the cost of interest-sensitive consumption and investment.