The Reserve Bank of India on Wednesday retained its growth projection for the financial year 2021-’22 at 9.5%.
However, it revised the gross domestic product growth for third quarter of this financial year to 6.6% from earlier 6.8%. It also cut the fourth quarter projection to 6% from 6.1%.
For the first quarter of 2022-’23, the growth forecast has been retained at 17.2%. In the second quarter, the gross domestic product is expected to grow at 7.8%.
The central bank also kept the repo rate unchanged at 4% and the reverse repo rate at 3.35%. This is the ninth consecutive time that the central bank has maintained status quo.
The repo rate is the rate at which the central bank lends to its clients generally against government securities. The reverse repo rate, on the other hand, allows banks to deposit funds with the central bank and earn interest on it.
Announcing the decisions of the monetary policy committee, at the end of its three-day bi-monthly meeting, RBI Governor Shaktikanta Das said the committee voted unanimously to retain the repo rate.
“The MPC [Monetary Policy Committee] said the policy stance will remain “accommodative” until there is sustainable recovery in the economy,” he said.
Meanwhile, the consumer price inflation target for the current financial year has been retained at 5.3%. For the third quarter, the central bank projected inflation to increase to 5.1% from 4.5% and in fourth quarter it forecast a decrease from 5.8% to 5.7%.
For financial year 2022-’23, the central bank revised its inflation projection to 5% from 5.2% for the first quarter. For the second quarter it projected inflation to be at 5%.
Das also said that recovery in the Indian economy was gathering traction. “Government consumption has picked up from October 2021,” he said. “The recent tax cuts on petrol and diesel should help in crowding-in private investment.”
However, he also said that emergence of Omicron variant of coronavirus has led to apprehensions about restrictions on travel and economic activity, which has led to “considerable uncertainty on growth dynamics” for the coming months.