MUMBAI: SBI Research has forecast the Indian economy to grow 7.5% in 2022-23, an upward revision of 20 basis points from the previous estimate.
According to official data, the economy grew by 8.7% in FY22, adding Rs 11.8 lakh for the year to Rs 147 lakh crore, the report added, however, the figure was only Rs 147 lakh crore, the report added. 1.5% higher than the year before the pandemic. YEARS 20.
“Given high inflation and upcoming interest rate hikes, we believe real GDP will gradually increase to Rs 11.1 lakhs in FY23. This still translates to real GDP growth of 7.5k. % for fiscal year 23, up 20 basis points from the previous forecast,” SBI chief economist Soumyakanti Ghosh said in a note on Thursday.
Nominal GDP increased by Rs 38.6 lakh crore to Rs 237 lakh crore, or 19.5% year-on-year. Also in fiscal year 23, when inflation is still rising in the first half of the year, nominal GDP will increase by 16.1% to Rs 275 lakh, he said.
The report is based on optimism about the company’s growing revenue and profit and growing bank credit along with ample liquidity in the system.
In terms of accelerating corporate growth, the report notes that in fiscal year 22, around 2,000 listed companies reported a 29% growth in revenue and a 52% increase in net profit year-over-year.
Construction sectors including cement, steel, … reported impressive growth in both revenue and NPAT with an increase of 45% and 53% in revenue, respectively.
Interestingly, order book position remains strong, with construction firm L&T reporting 9% growth for order book position at Rs 3.6 lakh as of March, supported by 10% growth on orders of Rs 1.9 lakh in financial year Rs 22 and Rs 1.7 respectively. lakh crore in fiscal year 21.
Similarly, industry-wide data for April shows credit defaults occurred in most sectors led by personal loans registering a 14.7% spike in April and contributing About 90% of credit increases for the month, mainly due to housing, auto and other personal loans as customers expect interest rates to increase, have prepared their purchases in advance.
On the liquidity front, the report expects the central bank to support growth by only gradually increasing the repo rate, but mostly preloading in June and August with a 50 basis point repo increase and CRR ( cash reserve ratio) increased by 25 basis points. upcoming June policy.
Core system-wide liquidity decreased from Rs 8.3 lakh at the beginning of the year to Rs 6.8 lakh crore now while net LAF absorption ratio (liquidity adjusted basis) decreased from Rs 7.5 lakh crore 3.3 Rs lakh crore.
The RBI will likely increase the cumulative repo rate by 125-150 basis points from a pandemic level of 4%.
The central bank may also increase the cumulative CRR by 50 basis points, following a 50 basis point increase in the final monetary policy, which will result in the absorption of Rs 1.74 lakh crore from the upper market. durable base (Rs 87,000 crore previously absorbed).
Heavy government borrowing has ruled out OMO selling, so increasing CRR seems like a non-disruptive option to absorb long-term liquidity. Furthermore, this opens up the space for the central bank to do future liquidity management through OMO purchases.
With this, the money regulator can return to the market at least three quarters of Rs 1.74 lakh absorbed through a CRR increase or Rs 1.30 lakh crore in some form to settle limited supply. This will reduce the borrowing in the market to around Rs 13 lakh crore.
With crude oil prices higher, trading above $120 per barrel, the report shows inflation averaging 6.5-6.7% in fiscal year 23.