India's FY23 GDP growth could surpass 7% estimate: RBI Governor Shaktikanta Das

RBI Governor Das

The Indian economy may have grown faster in 2022-23 than the statistics ministry's estimate of 7 percent, Reserve Bank of India (RBI) Governor Shaktikanta Das said on May 24.

"For the year that has just ended, 2022-23, the estimates are that it (GDP growth) will be 7 percent. But there is a possibility that it could be even more," Das said at the CII Annual Session in New Delhi.

"According to all recent trends, it will not be a surprise if GDP growth for last year comes slightly more than 7 percent. But let's stick to 7 percent for the time being," he added.

As per the statistics ministry's second advance estimate, released on February 28, India's GDP is estimated to have grown by 7 percent in 2022-23.

The ministry will release GDP data for January-March and the first provisional estimate of GDP for 2022-23 on May 31. The ministry's second advance estimate of 7 percent implies a GDP growth rate of 5.1 percent in January-March.

"All economic indicators in Q4 of last financial year (January-March), they show that economic activity sustained momentum. In fact, all the high-frequency indicators, about 70 of them which we monitor at the Reserve Bank of India, almost in all of these high-frequency indicators the momentum was maintained in Q4," Das said on May 24.

"So therefore, I would not be surprised, we should not be surprised, if growth is slightly more than 7 percent," he added.

The RBI, for some time, has been bullish about India's growth numbers. While not many have been convinced - including members of the Monetary Policy Committee - by the data, some economists seem to be coming around to the central bank's view and have echoed Das' optimism.

According to Rahul Bajoria, head of EM Asia (ex-China) Economics Research at Barclays, GDP growth may have risen to 5.4 percent in January-March from 4.4 percent in October-December.

"Our 5.4 percent headline GDP growth estimate would suggest slight upside risks to our 2022-23 growth forecast of 7 percent," Bajoria said in a note on May 24.

For 2023-24, Bajoria's GDP growth forecast is 6.3 percent - 20 basis points lower than the RBI's forecast of 6.5 percent.

"Overall, we think a steady growth trajectory, despite the external headwinds, will likely be of comfort to the RBI in holding rates, even as inflation is expected to fall. We continue to believe that the window for rate hikes has closed following the policy pause in the April meeting. The RBI is likely to be on hold for the rest of the fiscal year, in our view, with only a major upside inflation shock likely to stir the bank back into rate action," Bajoria added.