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Below is Comment on RBI Monetary Policy By Mr. Umesh Revankar, Vice Chairman & MD, Shriram Transport Finance

“The RBI Governor monetary policy statement today highlighted concerns over inflation and downside risks to growth emerging on account of escalation in geopolitical tensions, protracted supply disruptions. The RBI kept key rates unchanged on expected lines and the MPC committee decided to remain ‘accommodative’ while focussing on withdrawal of accommodation to ensure that inflation remains within the target, while supporting growth. The RBI revised FY23 GDP growth downwards to 7.2% (from earlier projection of 7.8%) and hiked Inflation projections to 5.7% for FY23 (from earlier projection of 4.5%). While the RBI is going to focus on calibrated withdrawal of liquidity, the Governor reiterated the commitment to ensure availability of adequate liquidity for productive requirements of the economy. The uncertainty evolving around geopolitical tensions, high global crude oil prices are likely to keep input cost pressure elevated and hence pose challenges for the economy. We now expect possible rate hike by the RBI in 2HFY23, although in a calibrated manner. CV sales have improved in Q4 and we remain hopeful of pick up in Investment activity due to continuing support from government capex and easy financial conditions. While we are seeing signs of recovery in the MHCV segment and revival in CV demand, we now also will be vigilant about the impact of continued high crude oil prices on the CV sector. RBI extension of support for individual housing loans is welcome, and we reiterate the need for continuous support for MSMEs as they are in revival mode.”

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