With India’s headline inflation for the October-December period falling below the RBI’s estimate, the central bank could reevaluate its strategy amid an ongoing global growth slowdown, Pathak said in a Tuesday interview with Bloomberg Television.
India’s retail inflation cooled for a third straight month in December, as higher borrowing costs dampened demand and eased pressure on the RBI to raise interest rates next month. To rein in prices, the central bank has delivered five straight increases in FY23 to take the benchmark rate to 6.25% — the highest in four years.
Pathak said growth is a major area of concern for 2023, as issues surrounding high inflation and hawkish monetary policies recede.
India’s gross domestic product will grow 7% in the fiscal year ending in March, according to the first official estimate released by the Statistics Ministry. That’s higher than the RBI’s forecast of 6.8%.
Pathak expects India to continue on a path of fiscal consolidation and focus more on capital expenditure in the FY24 budget, which is likely to be presented on Feb. 1.
While Pathak said the budget will likely grow by around 5% to 6%, she expects capital expenditure to rise as much as 15% to 20% and revenue expenditure to increase by 5% to 7%.
