India may relook inflation, growth projections, says RBI deputy governor Michael Patra

India’s central bank may review its forecast for growth and inflation at its next policy meeting, a top official said, as the global economy feels the ripple effects of Russia’s war in Ukraine.

Geopolitical developments pose an upside risk to the Reserve Bank’s of India’s projection for inflation to ease to 4% by the October-December quarter of next fiscal year, and the April meeting provides an opportunity to thoroughly review the forecasts, Deputy Governor Michael Patra said in a speech.

The central bank last month forecast GDP growth in the year beginning April to slow to 7.8% from an 8.9% pace estimated by the government for this year. The RBI also saw full-year inflation easing to 4.5% next fiscal from 5.3% now.


“International crude prices present an overwhelming risk” to inflation, Patra said, adding that any spike in prices would still be treated as supply shock at this stage, in a clear signal that monetary policy will continue to be supportive of economic growth.

India’s government is equipped to deal with the inflation risk by cutting excise duties to spare consumers higher pump prices, he said.

Read: India Rate-Setter Sees Fiscal Room to Absorb Oil Spike

While India has a small linkage through trade and direct channels to the ongoing crisis, the potential spillover effects can’t be ruled out, Patra said.

The current-account deficit will remain within 2.5% of gross domestic product and the external sector remains robust, Patra said.