The people who normally vote for temples and communal issues also agree they are hit by rising prices

As polls begin in UP, the RBI' s monetary policy committee (MPC) lowers growth forecasts to 7.8 percent in 2022-23, against finance minister's 8-8.5 percent. A belt-tightening forecast. It has kept the interest rates unchanged at a low of 4 percent repo rate and 3.5 percent reverse repo rate.

Former chief economic advisor Kaushik Basu notes that growth has been decelerating. It was 8.2 percent in 2016-17; 7.2 percent 2017-18; 4.2 percent 2018-19; and minus 7.3 percent 2020-21, each year growing less, a first since 1947.

The MPC presumes retail price inflation this year to be at 4.5 percent but cautions about hardening of global crude prices on inflation. Overall, it has retained its inflation projection at 5.3 percent and with closing at 5.7 percent by March on account of unfavourable base effects. However, it ignores 13-plus percent of wholesale inflation.

The voters are not bothered about the nitty gritty but are changing their perception of development - vikas-- to mean they are voting for whosoever would help them grow. Almost uniformly, the voters in UP say that they are voting for vikas, and quizzed further, they say that they are voting for "our own vikas" and name an opposition SP-RLD candidate. For other voters vikas may still mean Yogi Adityanath and Prime Minister Narendra Modi.

Though it signals a change, it is to be seen how the incumbent BJP fares. The BJP as per the new manifesto is no more contesting the poll on doubling of farmers' income, or ensuring MSP to all.The people who normally vote for temples and communal issues also agree they are hit by rising prices. 

The lone voice dissenting the MPC outlook is that of Prof Jayanth R Varma. He had disagreed with the MPC resolution on August 20, 2021saying: "By creating the erroneous perception that the MPC is no longer concerned about inflation and is focused exclusively on growth, the MPC may be inadvertently aggravating the risk that inflationary expectations will be dis-anchored. In that scenario, rising risk premia could cause long-term rates to rise".

The voters may not have read it but with their practical intuition seem to agree with the perception. The mood for change is there, for better living conditions. RBI Governor Shaktikanta Das says that next year's Centre's borrowings would not be as high as projected in the budget. It means shrinkage of borrowings, deposits, uncertain expenses and growth. It is a bit eerie.

Consumption is not rising. That seems to be the concern of the voters, RBI and the government alike.  The voters realise that economy would be shaky whatever the official rhetoric.

There is no short-term reprieve for the common man. Governor Das says that rising inflation would continue to peak till the second half of 2022-23 "within the tolerance band of RBI providing room for policy to remain accommodative".  

Overall, the MPC notes loss in momentum of near-term growth even as global factors turn adverse. It assesses that owing to Ukraine-Russia conflict, Iran-US qualm, fluid Afghanistan and uncertain Middle East the economic situation may deteriorate. In such circumstances, expecting improvement in domestic growth drivers is bit optimistic. These have been the concern for lowering growth to 7.8 percent. It expects a very high growth in the first quarter and then gradually tapering off to 4.5 percent in the last quarter of 2022-23, according to Das.  

Though Indian voters need not understand the phenomenon emerging in the distant West, it can hit India hard. The world growth may be hit by the difficult situation in the US.Despite tom-tommingabout high growth, the US suffers from the China syndrome. China has bought none of the $200 billion it promised from the US under 'phase-I' trade deal. It can lead the US into choppy waters, impacting the global economy. A global inflation and unstable US economy can create turbulence.

The persistent increase in international commodity prices, surge in volatility of global financial markets and global supply bottlenecks can exacerbate risks to the outlook, says Das. Yes, Chinese trade moves in Indian subcontinent might also cause difficulty.

Das says still India can recover with buoyant rabi crop, robust exports, liquidity conditions improving credit offtake and continued push on capital expenses and infrastructure. The hope is a bit high and the MPC's cautions are graver than any voter can expect.

(The writer is a senior journalist. The views expressed are personal.)