"It may be noted that around 75 per cent of the increase in inflation projections can be attributed to the food group. Further, the baseline inflation projection of 6.7 per cent for 2022-23 does not take into account the impact of monetary policy actions taken today," Das said in his remarks earlier this morning while spelling out the outcome of the ongoing monetary policy review meeting that started on Monday.

For FY23, the RBI sees overall inflation at 6.7 per cent, with 7.5 per cent in Q1, 7.4 per cent in Q2, 6.2 per cent in Q3, and 5.8 per cent in Q4, taking into consideration the normal monsoon and average crude oil basket price of $105 per barrel.

India's retail inflation is likely to stay above the tolerance level of 6 per cent till third quarter of FY23 before moderating below 6 per cent, Das said.

India's retail inflation has been above RBI's 6 per cent tolerance level for four months in a row, while wholesale inflation in the country has been in double digits for over a year now.

'Between February and April, headline inflation has increased by about 170 basis points. With no resolution of the war in sight and the upside risks to inflation, prudent monetary policy measures would ensure that the second-round effects of supply side shocks on the economy are contained and long-term inflation expectations remain firmly anchored and inflation gradually aligns close to the target. The monetary policy actions including withdrawal of accommodation will be calibrated keeping in mind the requirements of the ongoing economic recovery."

The inflation projection of 6.7 per cent for FY23, however, does not take into account the impact of monetary policy actions taken on Wednesday, Das said.

The RBI on Wednesday raised the repo rate by 50 basis points to 4.9 per cent to tame rising inflation, which has been now above RBI's 6 per cent tolerance level for four months in a row.

Coming to growth, India's real GDP growth in FY23 is seen at 7.2 per cent, will 16.2 per cent in Q1, 6.2 per cent in Q2, 4.1 in Q3, and 4.0 in Q4, with risks broadly balanced, Das said in his post policy statement.