Reserve Bank of India Governor Shaktikanta DasThe Reserve Bank of India Governor Shaktikanta Das keeps the interest rate unchanged at 4% in the second bi-monthly Monetary Policy Committee meeting for this fiscal year. It continues with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of covid 19 on the economy while ensuring inflation remains within target, said Das.
RBI cuts FY22 GDP growth forecast to 9.5% from 10.5% earlier. The estimates of the National Statistical Office (NSO) as of May 31, placed India’s real GDP contraction at 7.3% for FY 20-21, with GDP growth in Q4 at 1.6% y-o-y.
“Forecast of the normal south-west monsoon, the resilience of agriculture and farm economy, the adoption of covid-19 compatible operational modes by businesses, and gathering moment of global recovery are forces that can provide tailwinds to the revival of domestic activity when the second wave abaits,” said the Guv.
Repo rate (lending rate) will continue at 4.00% and reverse repo rate (RBI’s borrowing rate) at 3.35%, announced Das.
MPC now sees CPI inflation at 5.1% in 2021-22; 5.2% in Q1, 5.4% in Q2, 4.7% in Q3 and 5.3% in Q4. Thereby, giving RBI some policy elbow room and policy support required to regain growth momentum, as per Das. Previously, it had projected CPI inflation at around 5% for the fiscal year 2021-22.