Nominal GDP grew by Rs 38.6 lakh crore to Rs 237 lakh crore or 19.5 per cent annually.
Mumbai:
SBI Research has projected the Indian economy to grow at 7.5 per cent in 2022-23, a growth of 20 basis points over its earlier estimate.
According to official data, the economy grew by 8.7 per cent in FY22, with a net increase of Rs 11.8 lakh crore in the year to Rs 147 lakh crore, the report said, though this was only in comparison to the pre-pandemic year. was 1.5 percent higher. fiscal year 2020
“Given the high inflation and subsequent rate hikes, we believe real GDP to grow by Rs 11.1 lakh crore in FY23. This is still at 7.5 per cent of real GDP for FY23. That translates into product growth, which is 20 basis points higher than our previous forecast,” SBI Chief Economist Soumyakanti Ghosh said in a note on Thursday.
Nominal GDP grew by Rs 38.6 lakh crore to Rs 237 lakh crore or 19.5 per cent annually. He said even in FY23, with inflation remaining high in the first half, nominal GDP would grow by 16.1 per cent to Rs 275 lakh crore.
The report bases its optimism on rising corporate revenues and profits and rising bank credit along with adequate liquidity in the system.
On rising corporate growth, the report said that in FY12, around 2,000 listed companies registered 29 per cent top line growth and 52 per cent net profit growth over the previous year.
The construction sectors, including cement, steel, etc., registered impressive growth in both revenue and net income, with revenue growing at 45 per cent and 53 per cent, respectively.
Interestingly, the order book position remains strong, with manufacturing major L&T reporting 9 per cent growth in the order book position at Rs 3.6 lakh crore till March from Rs 1.9 lakh crore in FY22. An increase of 10% in order flow and supports at Rs.1.7. lakh crore in FY21.
Similarly, sector-wise data for April indicates that there has been credit offtake across almost all sectors, with personal loans registering a demand growth of 14.7 per cent in April and nearly 90 per cent of incremental credit in the month. Contribution has been made, which is mainly driven by housing. Auto and other personal loans as customers are ramping up their purchases, anticipating a hike in interest rates.
On the liquidity front, the report expects the central bank to support growth only by gradually increasing repo rates, but mostly it will be reflected in the repo hike of 50 basis points in June and August and the CRR (cash reserve ratio) of 25 basis points. will proceed with the increase. Upcoming June policy.
Core systemwide liquidity declined from Rs 8.3 lakh crore at the beginning of the year to Rs 6.8 lakh crore now, while net LAF (liquidity adjustment facility) absorption declined to Rs 3.3 lakh crore from Rs 7.5 lakh crore.
The RBI is likely to raise the repo rate cumulatively by 125-150 basis points at the pandemic level of 4 per cent.
The central bank may cumulatively increase the CRR by 50 basis points after the 50 basis points hike in the previous monetary policy, leading to an absorption of Rs 1.74 lakh crore from the market on a sustainable basis (Rs 87,000 crore absorbed earlier).
Higher government borrowings have ruled out the possibility of OMO sales, thus the CRR hike appears as a potentially non-disruptive option to absorb durable liquidity. In addition, it opens up space for the central bank to do liquidity management in the future through OMO purchases.
With this, the monetary authority can give back to the market at least three-fourth of the Rs 1.74 lakh crore absorbed through CRR hike or Rs 1.30 lakh crore in some form or the other to address the period supply. With this, the market borrowing will come down to about Rs 13 lakh crore.
Given higher crude oil prices, trading above $120 a barrel, the report sees inflation average 6.5-6.7 per cent in FY23.