RBI Governor Shaktikanta Das announced that RBI has lowered its estimate for economic growth to 9.5 percent for 2021-2022 from earlier projection of 10.5 percent due to the impact of the second COVID-19 wave.
"Real GDP growth is now projected at 9.5 percent 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," Das said.
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In his address, Das said the sudden rise in COVID-19 infections, and fatalities has impaired the near nascent recovery that was underway but has not snuffed it out.
"The impulses of growth are still alive," he said, and added that the aggregate supply conditions have shown resilience in the face of the second wave.
The RBI Governor said the RBI will "continue to think and act out of the box", planning for the worst and hoping for the best.
The RBI had earlier forecasted 10.5 percent GDP growth for 2021-2022. For Q1, RBI had expected 26.2 percent, much higher than the now revised figure.
RBI also lowered the forecast for Q2 at 7.9 vs 8.3 percent earlier. The central bank had pegged Q3 growth at 5.4 percent and Q4 at 6.2 percent, both lower than the now revised growth figure.
Read | RBI Monetary Policy: CPI inflation projection rate at 5.1 percent for 2021-22
Das said that with external demand strengthening, a rebound in global trade is taking hold, which should support India’s export sector.
"Global demand conditions are expected to improve further buoyed by fiscal stimulus packages and the fast progress of vaccination in advanced economies. 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," the RBI Governor said.
Also read: Real GDP growth projected at 9.5% in 2021-2022, says Shaktikanta Das
Meanwhile, the RBI kept the key lending rate unchanged at 4 percent and the reverse repo rate or the central bank’s borrowing rate at 3.35 percent. This is the sixth time in a row that the Monetary Policy Committee (MPC) headed by Das has maintained status quo.
RBI had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
The central bank lowered its estimate for economic growth to 9.5 percent for the current fiscal from earlier projection of 10.5 percent due to the impact of the second COVID wave.
With regard to inflation, the governor said that retail inflation is likely to be 5.1 percent during the current fiscal.
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