RBI Governor Shaktikanta Das-led MPC raises repo rate by 50 bps; 3rd hike in rates set to take loans August 2019 levels.
In another 10 days it's a great moment for all of us i take this opportunity to convey my warm greetings to everyone on this historic occasion successive shocks to the global economy are taking their toll in terms of globalized inflationary surges tightening of financial conditions sharp appreciation of the us dollar and lower growth across geographies multilateral institutions including the international monetary fund that is the IMF have revised global growth projections downwards and highlighted recession risks.
Disquietingly globalization of inflation is coinciding with deglobalization of trade the pandemic and the war have ignited tendencies towards greater fragmentation re-showing of supply chains and retrenchment of capital flows which will pose long-term challenges to both globalization and the global economy itself for emerging market economies that is emes these risks are magnified as they have to contend with both domestic growth inflation trade-offs and spillovers from the most synchronized monetary policy tightening.
Worldwide emerging market economies are also facing rapid tightening of external financial conditions capital outflows currency depreciations and reserve losses all happening
simultaneously some of them are also facing mounting burdens of debt and default elevated food and energy prices and shortages are rendering their population's vulnerability to insecurity of livelihood the indian economy has naturally been impacted by the global economic situation.
We have been grappling with the problem of high inflation financial markets have remained uneasy despite intermediate corrections we have witnessed large portfolio outflows to the tune of us dollar thirteen point three billion i repeat thirteen one three thirteen point three billion during the finance current financial year so far that is till third of august that is still two days ago nevertheless with strong and resilient fundamentals india is expected to be amongst the fastest growing economies during the financial year 22-23.
According to the projections of the IMF with science of inflation moderating. over the course of the current year export of goods and services together with remittances are expected to keep the current account deficit within sustainable limits the decline in external debt to GDP ratio net international investment position to GDP ratio and debt service ratio during 21-22 impart greater resilience against external shocks i have the numbers for each of these parameters which i mentioned they are in the footnote of my statement and the statement as you know gets uploaded immediately after my statement is over.
So you can have a look at it but for the benefit of the wider audience if i can mention the exact numbers external debt to GDP ratio fell from twenty 21.2 in march 2021 to 19.9 percent in march 2022 net international investment position to GDP ratio that is net claims of non-residents improved from minus 13.2 percent to 11.6 percent over the same time period debt service ratio declined from 8.2 percent in 2021 to 5.2 percent in 21-22.
Amidst all this the financial sector remains well capitalized and sound indian for india's foreign exchange reserves supplemented by net forward assets provide insurance against global spillovers our umbrella remains strong.
I would now like to focus on the decisions and deliberations of the monetary policy committee against this background the monetary policy committee that is mpc met on third to 5th august and reviewed the macroeconomic situation and its outlook the MPC decided unanimously to increase the policy repo rate by 50 basis points to 5.4 percent with immediate effect.
Consequently the standing deposit facility that is sdf rate stands adjusted to 5.15 percent and the marginal standing facility that is msf rate and the bank rate stand revised to 5.65 percent the mpc also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward while supporting growth