Reserve Bank revises India’s real GDP growth rate to 9.5pc in 2021-22 from the earlier estimate of 10.5pc. For Q1, the GDP forecast stands at 18.5pc; 7.9pc for Q2; 7.2pc for Q3 and 6.6pc for Q4.
The central bank’s growth outlook indicates that rural demand remains strong and the forecast of a normal monsoon augurs well for sustaining economic activities, going forward. But the rise in the spread of COVID-19 infections in the rural region poses a downside risk, states the monetary policy statement.
The second wave of the pandemic has hit urban demand, but the adoption of new business models may cushion the impact on economic growth, especially in the sectors that are not contact-intensive.
Strengthening global recovery is expected to support exports while domestic financial conditions are highly accommodative. Also, the speeding up of the vaccination drive could help normalise business sentiment.
India’s real GDP contracted by 7.3pc in 2020-21, with a Q4 GDP growth rate of 1.6pc compared to the prior year, according to National Statistical Office (NSO) data.
RBI has kept the repo rate unchanged at 4pc and the reverse repo rate unchanged at 3.35pc with an accommodative stance of monetary policy for as long as it is required for reviving and sustaining growth and mitigating the impact of the pandemic.
RBI projects retail inflation at 5.1 per cent in FY 2021-22.