The Reserve Bank of India (RBI) has projected India’s economic growth rate for the financial year 2022-23 at 7.8%, lower than 8-8.5% estimated by the finance ministry in the Economic Survey which was tabled in parliament earlier this month.

This is down from 9.2% expected in the current financial year, triggered by uncertainties on account of the pandemic and elevated global commodity prices.

RBI Governor Shaktikanta Das, while unveiling the bi-monthly policy, said the economic momentum was impacted due to the third Covi-19 wave and demand for contact intensive sector remained muted.

"Recovery in domestic economic activity is yet to be broad-based, as private consumption and contact-intensive services remain below pre-pandemic levels," Das said.

Global financial market volatility, elevated international commodity prices, especially crude oil and continuing global supply-side disruptions pose downside risks to the outlook," he added.

The government’s proposed increase in capital expenditure spending is expected to strengthen aggregate demand and crowd in private investment through large multiplier effects.

There is some loss of the momentum of near-term growth while global factors are turning adverse, Das said.

"Looking ahead, domestic growth drivers are gradually improving. Considering all these factors, real GDP growth is projected at 7.8% for 2022-23 with Q1:2022-23 at 17.2%; Q2 at 7%; Q3 at 4.3%; and Q4 at 4.5%," he added.

As per the first advance estimates of national income released last month by the National Statistical Office (NSO), India's real gross domestic product (GDP) growth is pegged at 9.2% for 2021-22.

"All major components of GDP exceeded their 2019-20 levels, barring private consumption. In its January 31 release, the NSO revised real GDP growth for 2020-21 to (-) 6.6% from the provisional estimates of (-) 7.3%," the RBI Governor said.

Available high frequency indicators suggest some weakening of demand in January 2022 reflecting the drag on contact-intensive services from the fast spread of the Omicron variant of coronavirus in the country, he said.

Rural demand indicators two-wheeler and tractor sales contracted in December-January, he said, adding, area sown under rabi crops up to February 4, 2022 was higher by 1.5% over the previous year.

Amongst the urban demand indicators, he said, consumer durables and passenger vehicle sales contracted in November-December on account of supply constraints while domestic air traffic weakened in January under the impact of Omicron.

Investment activity displayed a mixed picture while import of capital goods increased in December, production of capital goods declined on a year-on-year basis in November.

Merchandise exports remained buoyant for the 11th successive month in January 2022; non-oil, non-gold imports also continued to expand on the back of domestic demand.