To provide the necessary support to the struggling economy hit by the pandemic, RBI’s Monetary Policy Committee keeps the repo rate unchanged to 4%. It has maintained its accommodative stance on the repo rate which means that all the members of the rate-setting panel voted in favour of not changing the rates.
Shaktikanta Das, RBI’s Governor said announcing the monetary policy, “The need of the hour is not to drop out the guard and remain vigilant against any possibility of a third wave especially in the backdrop of rising infections in certain parts of the country.”
The Policy Statement stated, “While the Government has taken certain steps to ease supply constraints, concerted efforts in this direction are necessary to restore supply-demand balance. The nascent and hesitant recovery needs to be nurtured through fiscal, monetary and sectoral policy levers.”
Das has emphasised that the conduct of MPC has been geared to rejuvenate growth and Continued policy support is required to nurture a nascent economic recovery. Das said,” While the recent inflationary trend has evoked concerns, this is more transitory. While inflation may remain high, the pressure should ease by the third quarter.”
RBI further Stated, “Recognizing the adverse impact of the second wave of COVID-19 and the resultant difficulties on the revival of businesses and in meeting the operational parameters, it has been decided to defer the target date for meeting the specified thresholds in respect of the above four parameters to October 1, 2022”.
To avail of the resolution plans announced in August last year, RBI had extended the deadline for companies to meet certain financial parameters required till March 31, 2022. This was done in wake of the adverse impact of the Covid wave on businesses.
While retaining the GDP growth target for the financial year at 9.5 per cent, RBI has increased the retail inflation to 5.7% for the financial year 2021-22 from 5.1% which was projected earlier.
Overall, monetary policy remains indicative of Growth.