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GDP growth may rise to 7.5%, RBI rates to be pragmatic: Report – ET Auto

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GDP growth may rise to 7.5%, RBI rates to be pragmatic: Report
India’s GDP growth is expected to upgrade to 7.5% owing to an improved statistical base and continued credit growth, according to the latest report by SBI Ecowrap.

The report also said that the Reserve Bank of India rate hikes are expected to be gradual and practical.

The GDP is expected to grow by Rs. 11.1 lakh crore in FY23 as the economy witnesses high inflation and the coming rate hikes. Nominal GDP rose to Rs. 237 lakh crore witnessing a 19.5% year-on-year growth. The report added that a 16.1% increase in GDP will occur in the first half of FY23.

The credit offtake was also seen to be healthy for FY22. Personal loan segments had a 14.7% growth in April 2022, contributing to 90% of incremental credit during the same month. Retail customers may assign their costs to the early stages, given the rise in interest rates.

RBI is expected to present a growth supportive policy in the June and August cycle. Core liquidity in the banking sector declined from 8.3 trillion in the beginning of FY23 to 6.8 trillion. The report estimates that there could be a 50 basis point repo rate hike and a 25 basis point CRR hike in the coming June policy.

RBI may raise the repo rate by 125-150 basis point over the pandemic level and increase the CRR rate by 50 bps. It had raised the latter to 50 bps in the last monetary policy.

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