India’s central bank has forecast the country’s GDP growth at 7.2% for 2022-23 from previous guidance of 7.8%, according to Governor Shaktikanta Das on Friday.

The Reserve Bank of India (RBI) also stated that the repo rate would remain unchanged for the 11th consecutive time.

The short-term lending rate was last lowered by the central bank in May 2020, and remains at a 4% historic low in a bid to increase demand by slashing the interest rate to a record low.

The RBI governor said on Friday the global economy is witnessing ‘tectonic shifts’ stemming from the war in Ukraine and major volatility within commodity and financial markets. In addition, the central bank governor increased the CPI inflation forecast to 5.7% for the current fiscal year compared to 4.5% in the last fiscal year.

“The downward revision of GDP growth rate and upward revision of retail inflation were expected. From a medium term perspective, the measures are supportive of growth, price stability and orderly development in the financial markets," said Sujan Hajra, Chief Economist and Executive Director of Anand Rathi.

India’s economy grew at a slower-than-forecast pace of 5.4% in the fourth quarter, compared to 0.7% the year before and 8.5% in the prior quarter.

According to former central bank governor Bimal Jalan, India’s economy is in good shape as the GDP growth rate and foreign exchange reserve are high. Despite the economic uncertainty fuelled by the war in Ukraine impacting the global supply chain, Jalan said it won’t impact India’s economic performance.

"India's current macroeconomic situation is quite positive in the sense that the rate of growth is high. India's foreign exchange reserve is also very high," he said to PTI. "India (Indian economy) is in good shape," Jalan added.