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In the upcoming meet in December, the MPC is likely to raise the benchmark repo rate by 35 basis points, from 5.9% currently, he said.
While the latest consumer price inflation print of 6.77% for October was encouraging, the persistently high core inflation figure is likely to be a problem for the RBI to battle.
“We see inflation going down to 6.3% by March and 5.5% next year, which is back to the RBI’s target range of 2-6%…I think core inflation has to come off for us to declare the all-clear over inflation,” Sen Gupta said.
With uncertain macroeconomic conditions globally, India’s growth is likely to suffer in the coming quarters.
“Our CLSA activity index has come down to 6% handle from 13%, which is to be expected given that the base effects are fading,” he said. “We are looking at a growth of 6.8% for the full year, so obviously the next two or three quarters are going to be relatively weaker,” the economist said, adding that a recession in the US and Europe will likely lead to India’s gross domestic product growth easing to 5.2% in the next fiscal.
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