The Reserve Bank of India (RBI) has lowered India's GDP growth rate for the current financial year to 7.2 per cent from an earlier projection of 7.8 per cent.

Even as the central bank left the key policy rates including the repo rate – the rate at which the banks borrow from the RBI unchanged at 4 per cent, it turned a tad hawkish.

Amid the surge in prices of commodities, including crude oil, it has clearly signalled shifting focus from growth to managing inflation. RBI projected inflation to be at 5.7 per cent for FY23 a sharp increase from the 4.5 per cent estimated earlier.

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“As the horizon was brightening up, escalating geopolitical tensions have cast a shadow on our economic outlook. Although India's direct trade exposure to countries at the epicentre of the conflict is limited, the war could potentially impede the economic recovery through elevated commodity prices and global spillover channels,” RBI governor Shaktikanta Das said.

Crisil’s chief economist DK Joshi said that while maintaining an accommodative stance, the RBI has signaled calibrated removal of accommodation in this fiscal going forward.

“Upside risks to inflation show no signs of abating, with crude oil prices persisting above $100 per barrel, and food and metal prices at record highs. Along with increasing cost pressures, we expect the pressure on consumer prices to broaden as well this fiscal,” Joshi said.