The Reserve Bank of India Governor Shaktikanta Das kept the GDP growth projection for FY 2021-22 unchanged at 10.5 per cent, while pointing out that global growth remains uncertain in face of raging Covid19 cases. “Vaccine distribution and its efficacy is key to global economic recovery,” the RBI Governor said and and assured that the central bank will continue with an accomodative monetary policy to mitigate the impact of the pandemic.
The pandemic continues to pose a threat to growth. The Index of Industrial Production (IIP) contracted by 1.6 per cent in January and the manufacturing PMI fell to a seven months low in March. At the last policy meet in February, the central bank had said it expected the economy to expand 10.5 per cent in the year that began April 1.
The projection of real GDP growth for 2021-22 increased of 26.2 per cent in the first quarter, 8.3 percent in the second quarter, 5.4 per cent in the third quarter and 6.2 per cent in the fourth quarter, the RBI said.
Meanwhile, the RBI Governor kept the key rates unchanged amid concerns that rising Covid-19 infections could derail the country’s nascent economic recovery. The central bank kept the repo rate steady at 4 per cent and reverse repo rate untouched at 3.35 per cent.
The central bank also revised downward the retail inflation forecast for the fourth quarter of fiscal 2021 at 5 per cent against 5.2 per cent projected earlier.
RBI expects CPI inflation to be at 5.2 per cent in the first quarter, 5.2 per cent in the second quarter, 4.4 per cent in the third quarter and 5.1 per cent in the fourth quarter.
India reported 115,736 new coronavirus infections on Wednesday, after crossing the 1 lakh mark for the first time on Monday to become only the second country after United States to cross the grim statistic.