India’s Real GDP Growth For FY23 Seen At 7.5%, Says SBI Research

NEW DELHI, June 2 (IANS): India’s real gross domestic product (GDP) in FY23 is expected to be at 7.5 per cent, said SBI Research in a report.
“Given the high inflation and the subsequent upcoming rate hikes, we believe that real GDP will incrementally increase by Rs 11.1 lakh crore in FY23,” the report said.
For FY23 also, as inflation remains elevated in the first half, the report said the projection is that nominal GDP will grow by 16.1 per cent.
The report mentioned some of the factors that will impact the GDP growth for FY23.In FY22, around 2000 corporates in listed space reported 29 per cent growth in top line and 52 per cent growth in profit after tax, besides sector-wise data for April indicated that credit off-take had happened in almost all sectors.
“Personal loans segment continued to perform well, registering acceleration in growth to 14.7 per cent in April 2022 and contributed around 90 per cent of the incremental credit during the month, primarily driven by ‘Housing’, ‘Vehicle Loans’ and ‘Other Personal Loans’ segments. Customers, especially in retail verticals could be having a feel of future run expected in interest rates, and might be front loading their purchases in days to come, giving a fillip to consumer demands in select niche areas.”
Further, SBI Research said it expects central bank RBI to be supportive of growth and hike repo rates gradually, but mostly front load it in June and August policy review meetings.
It expects a 50 basis point repo rate hike and 25 basis point cash reserve ratio rate hike in forthcoming June policy meet. RBI is likely to raise the repo rate cumulatively by 125-150 basis points over the pandemic level of 4 per cent. RBI might also increase the cash reserve ratio rate cumulatively by another 50 basis points, after raising it by 50 basis points in the last monetary policy meet.
Lastly, the report said it was keenly watching the uncertainties regarding the crude oil prices. “At USD 120 per barrel, it still poses significant uncertainties regarding inflation trajectory. We, however, now believe that inflation will average 6.5-6.7 per cent in FY23 on the back of excise rate cuts by the government. Independent forecasts reveal that oil prices could climb further before declining, but it might still hold up at current levels for a longer period of time.”