“One can expect that the Indian economy will have upside potential for the projected growth rates. I would expect it to go back to the 7%-plus range,” Kumar said in a note outlining his views on the MPC minutes.
Kumar said the Indian economy’s growth outlook had improved materially since the MPC’s June meeting, citing stronger than expected economic data and a sharp retreat in crude oil prices following the signing of a peace accord in West Asia.
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The MPC members had voted for a status quo in the June policy, citing resilient growth and the need to assess inflation impact while stating that the MPC would closely monitor incoming data.
The Reserve Bank of India has projected FY27 growth at 6.6% in the June policy, while the economy expanded at 7.7% in the January-March quarter, exceeding earlier estimates.
RBI expected to hold repo at 5.25% as uncertainty eases, will watch food and fuel pass-through: BofA SecuritiesRecent easing of crude oil prices has also reduced concerns over inflation and the country’s external balances. Brent crude, which had surged to around $115 a barrel amid disruptions in West Asia, has since fallen below $80 a barrel. On the external front, Kumar said recent measures by the RBI to attract foreign currency deposits, alongside government initiatives to encourage investment in sovereign debt, were likely to offset capital outflows and stabilise the rupee. A stable currency and softer oil prices would also create downside risks to inflation forecasts, he said.