The Reserve Bank of India (RBI) has revised the real GDP growth projection for FY21 upwards to (-) 7.5 per cent on the back signs of faster recovery after the narrowing of the GDP contraction for the July-September, along with hopes of Covid-19 vaccines.
This is an upward revision from the earlier estimate of (-) 9.5 per cent. In his video statement post the Monetary Policy Committee's (MPC) meet, RBI Governor, Shaktikanta Das on Friday said that the growth will enter the positive zone in the third quarter of current fiscal with the projection that GDP may grow at 0.1 per cent and the growth will further improve in Q4 to 0.7 per cent.
Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with the RBI. The RBI has also projected real Gross Domestic Product (GDP) growth for 2021 at minus 7.5 per cent. The RBI had projected that in H1 of FY22, the GDP growth may be around 6.5 per cent.
Das announced that the MPC has decided to keep the repo rate unchanged at 4 per cent
The RBI Governor said that the rural economy still continues to lead the overall recovery and the urban demand is also accelerating.
Noting that the economic recovery for India has been faster than anticipated, he said that the road to recovery is still clouded by the rise in Covid cases in patches across the country, which may lead to local restrictions, obstructing economic activities.
while keeping the accommodative stance intact. He assured that the committee will continue with the accommodative stance at least for the current financial year.