BackRBI retains GDP growth target at 9.5% for FY22
The RBI today also retained retail or consumer price inflation inflation projection at 5.3% in 2021-22.
PremiumThe Reserve Bank of India today retained GDP growth target at 9.5% today. "Consumption demand has been improving and rural demand is showing resilience. Urban demand has also shown signs of strengthening," governor Shaktikanta Das said. The recent cut in petrol and diesel prices will also support demand, he said.
India's economy expanded 8.4% in the September quarter from a year earlier, the fastest pace among major economies but economists said disruptions from the new virus variant risked slowing the recovery.
The RBI today also retained retail or consumer price inflation projection at 5.3% in 2021-22.
‘The Indian economy is showing strong and resilient signs of recovery as some high-frequency indicators reached their pre-pandemic level in the last two months. The recent GDP figures also show recovery in private consumption expenditure but the growth in the services sector is still lagging which may continue to be impacted due to the emergence of the omicron variant. Although the CPI inflation is inching up, the fall in global crude oil prices and recent excise duty cuts on petrol and diesel will support the inflation to remain within the RBI’s targeted band of 4-6%. Favourable monsoon and positive outlook for rabi production also augur well for food inflation. So, we welcome the much-needed move of the RBI to maintain the status quo and continue with the accommodative stance. This will continue to support economic growth while keeping inflation at check," Shanti Lal Jain, MD & CEO of Indian Bank
As widely expected, the Reserve Bank of India's monetary policy committee today kept its key lending rate steady. The committee held the lending rate, or the repo rate, at 4%. The reverse repo rate, or the key borrowing rate, was also maintained at 3.35%.
The six-member panel, which has been on pause mode since August last year, voted 5-1 to retain its accommodative policy stance as long as is necessary, reflecting a continued bias to support economic growth given inflation is within target.
"Given the slack in the economy and the ongoing catching up of activity, especially of private consumption, which is still below its pre-pandemic levels, continued policy support is warranted for a durable and broad-based recovery," Governor Shaktikanta Das told a news conference adding that disruptions from the new variant risked slowing the recovery.
Price stability remains cardinal principle of RBI as it fosters growth and stability, said governor Das while announcing monetary policy, adding that RBI the central bank would continue to manage liquidity in a manner to maintain financial stability.
The central bank has slashed the repo rate by a total of 115 basis points (bps) since March 2020 to soften the blow from the coronavirus pandemic and tough containment measures. This follows 135 bps worth of rate cuts since the beginning of 2019. (With Agency Inputs)
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