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Recognising the new reality of higher crude triggered by the war the RBI, as expected,  reduced the FY23 GDP growth rate projection to 7.2 percent from 7.8 percent earlier and raised the CPI inflation projection for Fy 23 to 5.7 percent from 4.5 percent earlier. This is based on the assumption of crude at $100. This implies that growth and inflation can be better if crude declines sharply if the war hopefully ends early. The reverse can be true if the war aggravates and crude spikes much above $100.

The Governor rightly emphasized India's macro strengths pointing to the improvement in the external situation helped by the record exports, ample forex reserves of $608 billion and strengthening of the financial sector. A new tool introduced by the central bank is the SDF ( Standing Deposit Facility) to absorb liquidity. SDF will be the floor of the LAF corridor"

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