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RBI Monetary Policy: Central bank sees GDP contracting by 9.5% in FY21; may turn positive by Q4

RBI Monetary Policy: Following the MPC meeting in August, Governor Shaktikanta Das had projected a negative real GDP growth in FY21.

October 09, 2020 / 07:37 PM IST

Reserve Bank of India Governor Shaktikanta Das on October 9 said India’s Gross Domestic Product (GDP) is seen contracting by 9.5 percent in FY21 amid economic disruptions caused by the novel coronavirus pandemic. Das also said that GDP growth may turn positive by Q4 amid some economic recovery.

"If, however, the current momentum of upturn gains ground, a faster and stronger rebound is eminently feasible," Das noted.

Das announced that the manufacturing purchasing managers’ index (PMI) for September 2020 rose to 56.8 -- its highest mark since January 2012-- supported by acceleration in new orders and production. The services PMI for September at 49.8 remained in contraction, but has risen from 41.8 in August.

"These expectations are also reflected in our growth projections which suggest that GDP growth may break out of contraction and turn positive by Q4," Das said.