Fri. Mar 29th, 2024
GDP

India’s Central Bank Governor Shaktikanta Das  today has announced that the RBI has lowered its estimate for economic growth from 10.5% to 9.5 percent for the current fiscal year of 2021-2022 due to the impact of the deadly second COVID-19 wave.

Shaktikanta Das said, “Real GDP growth is now projected at 9.5 per cent in 2021-22 consisting of 18.5 percent in Q1; 7.9 percent in Q2; 7.2 percent in Q3; and 6.6 percent in Q4 of 2021-22.”

 This revised forecast was largely due to downward revision of Q1 GDP, which was revised down to 18.5% ,from expected 26.2% , a change of -7.7 percentage points. 

RBI Governor further announced, “Global demand conditions are expected to improve further buoyed by fiscal stimulus packages and the fast progress of vaccination in advanced economies. India’s exports in March, April and May 2021 have launched into an upswing. Conducive external conditions are forming for a durable recovery beyond pre-pandemic levels. The need of the hour is for enhanced and targeted policy support for exports. It is opportune now to give further policy push by focusing on quality and scalability.”

On the other hand, the RBI did not change its stance on interest rates and kept them at record lows and further announced additional bond purchases to support the economic recovery Friday. This move came in response to the risk of being derailed by a devastating second wave of COVID-19 infections.

The vote came unanimously from RBI’s monetary policy committee (MPC) to hold the repo rate  at 4% and keep the reverse repo rate unchanged at 3.35%. This move was the same as predicted in a Reuters poll.

Shaktikanta Das while announcing the decisions said, “The MPC was of the view that at this juncture, policy support from all sides is required to regain the momentum of growth that was evident in H2:2020-21 and to nurture the recovery after it has taken root.”

Das further said, “With external demand strengthening, a rebound in global trade is taking hold, which should support India’s export sector.”

By Harshita Sharma

I bring to you updates from business, policy and economy spectrum.