The Reserve Bank of India (RBI) has hiked the repo rate rate by 25 basis points to 6.5 percent on February 8, citing sticky core inflation. This is the sixth time interest rates have been hiked since May 2022. The current hike takes the total quantum of hike to 250 basis points in less than a year.

Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) by a majority decided to raise the policy repo rate by 25 basis points and keep a 'strong vigil' on inflation outlook.

The Reserve Bank projected India's economic growth at 6.4 percent for 2023-24, broadly in line with the estimate of the Economic Survey tabled in Parliament last week. Gross Domestic Product (GDP) growth is estimated at 7 per cent in 2022-23, according to the first advance estimate of the National Statistical Office (NSO).

The Economic Survey 2022-23 projected a baseline GDP growth of 6.5 per cent in real terms for the next fiscal.Amid volatile global developments, the Indian economy remains resilient, said RBI Governor Shaktikanta Das while unveiling the last bi-monthly monetary policy of the current fiscal.

"Available data for Q3 and Q4:2022-23 indicate that economic activity in India remains resilient. Urban consumption demand has been firming up, driven by a sustained recovery in discretionary spending, especially on services, such as travel, tourism and hospitality.

Taking all these factors into consideration, real GDP growth for 2023-24 is projected at 6.4 percent with Q1 at 7.8 percent; Q2 at 6.2 per cent; Q3 at 6.0 percent; and Q4 at 5.8 per cent. The risks are evenly balanced," Das said.

He also informed that investment activity continues to gain traction. Non-food bank credit expanded by 16.7 percent (y-o-y) as of January 27, 2023. The total flow of resources to the commercial sector has increased by Rs 20.8 lakh crore during 2022-23 so far against Rs 12.5 lakh crore a year ago.

The Economic Survey 2022-23 projected a baseline GDP growth of 6.5 percent in real terms for the next fiscal, lower than the current year.

"Rural demand continues to show signs of improvement as tractor sales and two-wheeler sales expanded in December," he said.The governor further said passenger vehicle sales and domestic air passenger traffic posted robust year-on-year growth. Several high-frequency indicators also point towards the strengthening of activity.

The actual outcome for real GDP growth will probably lie in the range of 6 per cent to 6.8 per cent, depending on the trajectory of economic and political developments globally. (With inputs from PTI)