RBI Retains GDP Growth Forecast At 9.5% For FY22, Pegs 17.2% Growth For FY23
Mumbai: While announcing the monetary policy, RBI Governor Shaktikanta Das said that the projection of real GDP growth for 2021-22 has been retained at 9.5%. The central bank raised the GDP growth forecast for the first quarter of 2021-22 to 21.4% and lowered its forecast for the remaining three quarters.
RBI’s 9.5% GDP growth estimates consist of 21.4% in Q1; 7.3% in Q2; 6.3% in Q3; and 6.1% in Q4 of 2021-22. Real GDP growth for Q1:2022-23 is projected at 17.2%.
In its assessment, the central bank said external demand picked up during the first quarter of 2021-22 and this was reflected in the growth in exports, providing significant support to aggregate demand.
“Strong external demand is an opportunity for India and further policy support should help capitalize it. The vulnerability to new waves of infection, along with episodes of volatility in global commodity prices and financial markets, pose downside risks to economic activity,” RBI Governor Shaktikanta Das said.
Significantly, in the last monetary policy review held on June 4, the central bank had cut its gross domestic product (GDP) growth projections for the current fiscal to 9.5% from 10.5%.
The RBI’s GDP forecast comes at a time when various agencies have already lowered their GDP estimates for India amid concerns over a possible third wave.
Last month, the International Monetary Fund (IMF) slashed its 2021-22 economic growth forecast for India by 300 basis points to 9.5%. In its April review, the multilateral agency had pegged India’s economic growth for FY12 at 12.5%.
“Growth prospects in India have been downgraded following the severe second COVID wave during March-May and expected slow recovery in confidence from that setback,” the fund had said in a statement.
The MPC has today decided to keep the key policy rates – Repo at 4%, Reverse Repo at 3.35%, Marginal Standing Facility (MSF) at 4.25%. The MPC voted 5:1 in favour of maintaining a liberal stance.
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