The RBI raised its repo rate for the first time in four years
The RBI's Monetary Policy Committee (MPC) has maintained their growth outlook for the economy, estimating the country's GDP to grow at 7.4 percent in 2018-2019.
However, the Reserve Bank of India (RBI) revised growth projections for the first half and the second half of the year.
RBI now estimates GDP in H1 (April to September) to grow in the range of 7.5 -7.6 percent, an increase from its previous estimate of 7.3-7.4 percent (October to March).
The central bank slightly cut its GDP forecast for H2, estimating growth of 7.3-7.4 percent. In April, it had projected a growth forecast of 7.3-7.6 percent.
The central bank projected a positive estimate for investment activity, saying exports could be given a boost by strong demand.
"Global demand has also been buoyant, which should encourage exports and provide a further thrust to investment," the MPC said in a statement.
On the subject of fuel prices, the MPC said increasing costs of petroleum products could impact disposable incomes. "The sharp rise in petroleum product prices is likely to impact disposable incomes," the MPC said.The RBI raised its key repo rate by 25 basis points to 6.25 percent. This is the first time since January 2014 that the central bank has raised its repo rate.