Subir Gokarn, Chief Economist, CRISIL said that, if the inflation numbers this week are above 7% he is quite certain that there’s going to be a repo rate hike. He also said that he forcasts the GDP growth rate at about 8% if the inflation continues to remain above the 7% mark.

Excerpts from CNBC-TV18’s exclusive interview with Subir Gokaran:

Q: What are you expecting from the RBI on April 29? Not just rate action, but what are you expecting by way of growth and inflation forecasts?

A: I think, it will depend on this week’s inflation numbers. I don’t think anybody would have made up their minds just yet on whether to hike interest rates or not. This number will be important because it will provide about three weeks worth of assessment, in terms of what the government measures that were taken earlier in the month will have.

If it is above 7%, I think it is almost certain that there will be a repo rate hike and that will mean then that,  the growth forecasts will correspondingly perhaps go down. We are at this point about 8.1%, taking into account, the prospect of certainly no interest rate cuts over the next couple of quarters. But if interest rates are hiked, I think a more pessimistic forecast may be justifiable. So, around 8% or between 7.5-8%, if they take the range.

Now inflation is a tricky issue, because much of it is being driven by factors completely outside of the demand spectrum. There is monetary, there is food, there is energy. So, you can pick a number. It is really going to be very difficult to attribute it to any one thing.

Q: Indeed, if there is a repo rate hike, if inflation persists above the 7% mark, what will be your own GDP growth forecast?

A: I think, for the moment I would stay with around 8%. As I said we have come out recently with an 8.1%. We will take account of how the monsoon plays out, both the agriculture production directly and rural demand taking the monsoon into account and then come out with a revised number perhaps around end of August or early September.