The Reserve Bank of India revised the real GDP growth projection for 2020-21 from -9.5 per cent to -7.5 per cent, the Governor Shaktikanta Das said in an online briefing at the end of the meeting of the Monetary Policy Committee. The central bank had estimated GDP to contract by 9.5 per cent in its assessment in October. The RBI Governor also exuded confidence that the economy will witness positive GDP growth in the second half of FY21. The revised projection comes in the backdrop of the RBI’s decision to maintain an “accommodative” policy stance in its fifth bi-monthly monetary policy for FY21.
The Reserve Bank of India’s Monetary Policy Committee maintained the key lending rate unchanged at 4 per cent, holding the rates at existing levels for a third straight review. Since May, the repo rate – or the key interest rate at which the RBI lends money to commercial banks – has been kept steady at a 19-year low of 4 per cent. The reverse repo rate – the rate at which the RBI borrows from banks – will continue to be 3.35 per cent.
The status quo on monetary policy was expected by most economists, amid high levels of inflation and shrinking gross domestic product (GDP).
Retail inflation in the country rose to the highest level in October in more than six years due to higher food prices. According to Consumer Price Index (CPI) data released by the Ministry of Statistics and Program Implementation, inflation stood at 7.61 per cent in October, which was the highest level since May 2014.