The Reserve Bank of India today maintained its GDP growth target for this year at 9.5%. Announcing the policy statement, governor Shaktikanta Das said: The projection for real GDP growth is retained at 9.5% for FY 2021-22. This consists of 7.9% in Q2, 6.8% in Q3 and 6.1% in Q4 of 2021-22.” India’s gross domestic product (GDP) had surged 20.1% in the April-June quarter of FY22, according to the data released by the government’s statistics office.
The RBI has slashed the repo rate by a total of 115 basis points (bps) since March 2020 to soften the blow from the coronavirus pandemic.
As widely expected, the Reserve Bank of India’s monetary policy committee today kept repo rate steady at 4%, while the reverse repo rate or the borrowing rate also stayed unchanged at 3.35%. All 60 economists polled by Reuters had said they expected no change in the repo or reverse rates, which have been steady since May last year.
The RBI has slashed the repo rate by a total of 115 basis points (bps) since March 2020 to soften the blow from the coronavirus pandemic and tough containment measures. This follows 135 bps worth of rate cuts since the beginning of 2019.
Das said MPC voted unanimously for keeping interest rate unchanged and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target.
“We derive comfort from the fact that the inflation trajectory is turning out to be more favourable than anticipated,” Governor Shaktikanta Das said in a speech after the policy decision.
“In spite of global headwinds, we hope to emerge from the storm and sail towards normal times steered by the underlying resilience of the macroeconomic fundamentals of the Indian economy,” he said.
Indian stock markets extended gains after the policy announcement with Nifty trading 0.6% higher above 17,900.
“The decision to maintain status quo on key policy rates is significant as it comes at the onset of the festive season. We welcome the RBI’s move to keep rates unchanged despite the inflationary pressures, as adequate liquidity, and stable repo rate will play a catalytic role in the robust recovery of the country’s housing sector,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.
“At this juncture we are favorably poised with an encouraging ramp up on vaccination rate across the country, ongoing festive season, and opening up of the country, the time is right to ensure an orbital shift for the industry. Significant and timely measures for a sector like real estate, which has strong linkages with several other industries, would translate into a significant push to overall economic growth of the country.