Reserve Bank of India (RBI) Governor Shaktikanta Das-led Monetary Policy Committee retained the real gross domestic product (GDP) forecast of the current financial year 2021-22 at 9.5 per cent, projecting a growth of 7.9 per cent in the July-September quarter of the fiscal.
The GDP expanded by 20.1 per cent in the first quarter (April-June) of the current fiscal largely due to a low base effect as the economy contracted by a record 24.4 per cent in the year-ago period when the COVID-19 pandemic first hit the country.
The level of real GDP in the June quarter was 9.2 per cent below its pre-pandemic level two years ago, according to the central bank. On the demand side, almost all the constituents of GDP posted a strong year-on-year growth. On the supply side, the real gross value added (GVA) increased by 18.8 per cent year-on-year during the June quarter.
RBI Governor said that the rebound in economic activity gained momentum in August-September, driven by low rate of new COVID-19 cases, easing of restrictions and a sharp pick-up in the pace of vaccination.
Even though the outlook for aggregate demand is progressively improving, but the economic output is still below pre-COVID level and the recovery is uneven, being critically dependent upon policy support, added Mr Das. Compared to pre-pandemic levels, the contact intensive services, which contribute around two-fifth of economic activity in the country, are still lagging.
"The RBI kept key policy rates unchanged, policy stance accommodative was on expected lines. The central bank has stuck to its stated promise of keeping system liquidity excessive to help growth
The excess liquidity will help address the anemic growth in credit offtake. RBI retaining its GDP growth forecast for FY22 at 9.5 per cent is a sentimental booster and the CPI forecast for fy22 lowered to 5.3 per cent from 5.7 per cent earlier despite high crude prices will help address any concerns on rising inflation.
An accommodative policy by the RBI should be well complemented by strong corporate earnings, a high pace of vaccination, and a steady pace of economic growth,'' said Mr. Nish Bhatt, Founder & CEO, Millwood Kane International.
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