07/12/2022

Indian Economy To Grow By 6.1-6.3% In July-September: RBI

Inflation is, however, impacting corporate performance, RBI said in its report.(File)

New Delhi:

The Reserve Bank of India (RBI) today said it expects economic expansion to be between 6.1 per cent and 6.3 per cent in the July-September quarter which, if realised, will take India on a 7 per cent growth path for 2022-23.

The data for the second quarter of this financial year (July-September) is expected by November end.

“Based on high-frequency indicators, our nowcasting and full information models peg real GDP growth in July-September between 6.1 per cent 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,” the RBI said in its November bulletin.

The central bank said the cumulative procurement of rice during this kharif marketing season was more than last year’s collection, but wheat procurement has declined sharply.

The good news is that rabi sowing is up compared to last year. Good northeast monsoon rainfall and reservoir water storage levels are positive too, according to the RBI.

With headline inflation showing signs of easing, the economy on the macro font is “resilient” but sensitive to formidable global headwinds, RBI said.

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

The banking system is well-capitalised, with capital ratios for the system well above 16 per cent of total risk-weighted assets. “Gross non-performing assets (GNPAs) have consistently declined, with net NPAs sliding down towards 1 per cent of total assets,” the RBI said.

Inflation is, however, impacting corporate performance. Earnings results of more than 90 per cent of all listed non-financial companies point to the loss of momentum in earnings in the second quarter of 2022-23.

On the status of rupee, which has plunged to an all-time low of 83 level recently, the RBI said that the dollar’s rally to successive highs has sent currencies across the world into a downward spiral

A closer look reveals that emerging market currencies are posting only half the losses seen in advanced economy currencies, the bulletin said.

“Volatility in G7 currencies has surged above that of EM currencies for the first time since March 2020. This reflects resilience and the fact that early, aggressive rate hikes have delivered real rates or close to them, offering higher carry – Latin America has led the way.”

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