The Reserve Bank of India Governor Shaktikanta Das kept the GDP growth projection for FY 2021-22 unchanged at 10.5 per cent, while pointing out that global growth remains uncertain and giving an assurance that the central bank will continue with an accomodative stance to mitigate the impact of the pandemic. “Vaccine distribution and its efficacy is key to global economic recovery,” the RBI Governor Shaktikanta Das said.
The pandemic continues to pose a threat to growth. The Index of Industrial Production (IIP) contracted by 1.6 per cent in January and the manufacturing PMI fell to a seven months low in March. At the last policy meet in February, the central bank had said it expected the economy to expand 10.5 per cent in the year that began April 1.
The projection of real GDP growth for 2021-22 consisted of 26.2 per cent in the first quarter, 8.3 percent in the second quarter, 5.4 per cent in the third quarter and 6.2 per cent in the fourth quarter, the RBI said.
Meanwhile, the RBI Governor kept the key rates unchanged and stuck to its accommodative monetary policy stance amid concerns that rising COVID-19 infections could derail the country’s nascent economic recovery. The central bank kept the repo rate unchanged at 4 per cent and reverse repo rate untouched at 3.35 per cent. The RBI Governor also said the bank will continue with an accomodative stance “as long as necessary to mitigate the impact of the COVID-19 pandemic”.
India reported 115,736 new coronavirus infections on Wednesday.The central bank revised downward the retail inflation forecast for the fourth quarter of fiscal 2021 at 5 percent against 5.2 percent projected earlier.
RBI expects CPI inflation to be at 5.2 per cent in Q1FY22, 5.2 percent in Q2 FY22, 4.4 percent in Q3 FY22, and 5.1 percent in Q4 FY22.