Michael Patra, the RBI Deputy Governor of India said, “The geopolitical tensions threatened to suffocate the economic recovery that was making its way through multiple waves of pandemic.”
Michael Patra, the RBI Governor said that the current geopolitical reforms in Ukraine have challenged India’s economic vision, through darkening the nation’s vision and creating it extremely unfavourable.
Michael Patra on Friday made the comments at a PHD Chamber of Commerce and Industry event titled ‘Geo-Political Spill-overs and Indian Economy’ organized in New Delhi.
This geopolitical tension threatened to suffocate the economic recovery that was making its way through multiple waves of pandemic and with multiple mutations of the virus.
RBI Data Regarding India’s economic Recovery
The Reserve Bank of India (RBI) reviewed the actual GDP growth predicting from 7.8 per cent to 7.2per cent in a period of two months only.
The Retail Inflation in India has been above the Reserve Bank of India’s upper tolerance band of 6 per cent in May for the fifth consecutive months back-to-back, whereas the Indian Central Bank plans that it would continue to be on top until the third quarter of the present financial year 2022-23.
Further, the domestic wholesale inflation has been in double-digit for more than a year.
In the present financial year 2022-23, the inflation is planned to be 7.5 per cent in the first quarter, while it is planned to be 7.4 per cent in the second quarter and 6.2 per cent in the third quarter.
It may be taken into consideration that about 75 per cent of the rise in inflation projections can be assigned to the food group.
Similar to other emerging market economies, India also encounters with great risks, current one being high crude oil prices, tightening financial conditions, etc. However, Mr. Patra said, “India’s external sector is well-balanced, with relatively high reserves and a modest present account debt levels when compared to other colleagues.”
To control the inflationary pressures and anchor inflationary expectations, the RBIagrees to raise the policy repo rate by 50 basis points to 4.9 per cent in its current monetary policy committee review.
There has been a decrease in India’s current account deficit and it should be taken into consideration as traders in the foreign exchange market are betting that the nation’s CAD is going “haywire”, Mr Patra said.
He added, “The CAD has reduced to 1.5 per cent of GDP in Q4 of financial year 2022-23 from 2.6 per cent in Q3, bode well for external viability.”
