RBI set GDP growth rate at 9.5% FY22

RBI set GDP growth rate at 9.5% FY22

Today, the Reserve Bank of India retained the GDP growth target at 9.5%. "Consumption demand has been improving and rural demand is showing resilience. Urban demands has also shown signs of strengthening," governor Shaktikanta Das said. He said the recent cut in petrol and diesel prices would also support demand.

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.

TODAY, the RBI retained retail or consumer price inflation projection at 5.3% in 2021-22.

'The Indian economy is showing solid 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. However, the growth in the services sector is still lagging, which may continue to be impacted due to the emergence of the omicron covid variant.

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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%. Favorable monsoon and a positive outlook for rabi production also augur 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 expected, today's Reserve Bank of India's monetary policy committee kept its key lending rate steady. The committee held the lending rate, or the repo rate, at 4%. The reverse repo rate, or critical 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.

Price stability remains the cardinal principle of RBI. It fosters growth and stability, said governor Das while announcing the monetary policy, adding that RBI, the central bank, would continue to manage liquidity to maintain financial stability.

The central bank has slashed the repo rate by 115 basis points (bps) since March 2020 to ease the blow from the covid pandemic and strict containment measures. This follows 135 bps worth of rate cuts since the beginning of 2019.

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