Motilal Oswal Financial Services (MOFSL) said in a note that the estimate was below the market consensus of 7.6 per cent, and the Reserve Bank of India (RBI) was 8-8.5 per cent more hawkish.

Noting that there was “uncertainty” about the growth path, a local brokerage firm on Friday lowered its estimate of fiscal year 23 real GDP expansion to 6.3 percent, among the lowest within the analyst community.

Motilal Oswal Financial Services (MOFSL) said in a note that the estimate was below the market consensus of 7.6 per cent, and the Reserve Bank of India (RBI) was 8-8.5 per cent more hawkish.

The Reserve Bank of India (RBI) last week maintained its estimate of 9.5 per cent for the current fiscal year. However, the central bank said the country is growing well below its potential and it will take years to close the production gap.

“There is clearly more uncertainty about India’s GDP growth than the path of inflation. The MSIC team said while projecting a lower real GDP growth rate compared to market consensus.
The brokerage said that real GDP growth will decline further to 5.8 percent in fiscal year 24, indicating that there are more challenges in the near future.

However, he expects the Reserve Bank of India to raise interest rates next year by 0.50 per cent with a focus on consumer price inflation, which is expected to reach 5 per cent for FY23, after a figure of 5.3 per cent in FY22.

He said monetary policy normalization would be longer than widely expected, justifying that the Reserve Bank of India appears to be giving more weight to growth, which appears highly uncertain.

The brokerage expects the current account deficit to be 0.8 percent in fiscal year ’23, well below the consensus estimate. The federal government’s fiscal deficit is also expected to shrink to 5 percent from 6.8 percent in FY22.

She said the rupee will fall and will be at 76.4 against the US dollar at the end of fiscal year 23.

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