New Delhi: On Wednesday, The Reserve Bank of India increased the repo rate by 50 basis points to 4.90%. The rate hike, the second in two months, does not come as a surprise as the increase was highly anticipated. The RBI also left its FY23 GDP growth forecast unchanged at 7.2%. The current repo rate is 4.40% after the rates were increased by 40 basis points at an off-cycle meeting of the Monetary Policy Committee.
The repo rate remains still below the pre-pandemic level, RBI Governor Shaktikanta Das said as he explained the MPC is unanimous in its decision to gradually withdraw the extraordinary accommodation during the pandemic situation.
India’s Gross domestic product (GDP) growth, Das said, was estimated at 8.7 per cent in financial year (FY) 2021-22 as per the data released by the National Statistical Office (NSO) on May 31. For FY 2022-23, Das said the GDP forecast is projected at 7.2 per cent. The central bank has also decided to raise MSF Rate and Bank rate to 5.15% from 4.65%.
The RBI Governor also said that the inflation in FY 2022-23 is projected at 6.7 per cent as the monsoon is expected to be normal this year. In April, the central bank had predicted the inflation projection for the current fiscal at 5.7 per cent. The RBI on Wednesday proposed to allow the linking of credit cards to the UPI platform to provide additional convenience to the users. In the beginning, Rupay credit cards will be linked to the UPI platform. As of now, the UPI platforms are linked to debit cards.
Shaktikanta Das said, “UPI has become the most inclusive mode of payment in India with over 26 crore unique users and five crore merchants on the platform. The progress of UPI in recent years has been unparalleled. Many other countries are engaged with us in adopting similar methods in their countries”.