RBI expected to remain cautious with focus on achieving full growth potential: FICCI

New Delhi [India], February 8 (ANI): Subhrakant Panda, president of industry body FICCI has said the Reserve Bank of India is expected to remain cautious while focusing on the economy achieving its full potential.

In the just concluded three-day monetary policy committee meeting, the RBI decided to raise the repo rate, the rate at which the RBI lends money to all commercial banks, by 25 basis points to 6.5 per cent. Since May last year, the RBI has increased the short-term lending rate by 250 basis points, including today’s, to contain inflation. India’s retail inflation was above RBI’s six per cent target for three consecutive quarters and had managed to fall back to the RBI’s comfort zone in November 2022.

“The 25 bps hike in policy repo rate by the Reserve Bank is in line with expectations. While the inflation trajectory over the course of next year is expected to be below 6 per cent and will be somewhat of a reprieve, there is an upside risk on account of geopolitical factors,” FICCI’s Panda said.

Further, on the capital expenditure announced in the Budget, Panda said it will set in motion a virtuous cycle by also crowding in private investments.
“The Indian economy is inherently resilient and has the wherewithal to overcome short term turbulence in its pursuit of inclusive and sustainable growth,” Panda added.

The Budget document for 2023-24 proposed to increase capital expenditure spending by 33 per cent to Rs 10 lakh crore, focusing on augmenting core infrastructure assets, including roads, railways, airports and logistics.
Capital investment outlay for 2023-24 is being increased steeply for the third year in a row — which would be 3.3 per cent of GDP.