RBI Projects Economic Growth At 7.4% In 2019-20

RBI Governor Shaktikanta Das said the risks are evenly balanced for economic growth.
RBI Governor Shaktikanta Das said the risks are evenly balanced for economic growth.
  1. The projection for the coming financial year stood at the same level as the RBI's December estimate for the current financial year.
  2. The growth projection for the financial year beginning April 1, 2019 came as the RBI announced a 25-basis-point reduction in repo rate - the key interest rate at which it lends short-term funds to commercial banks. That marked the first reduction in the repo rate since August 2017.
  3. Since the December policy meet, the RBI said, there has been a slowdown in global economic activity. It also noted that economic activity in the US lost some steam in the fourth quarter of 2018, while growth decelerated in China.
  4. "Global growth is slowing down across key advanced economies and some major emerging market economies as well. World trade is also losing momentum… International commodity prices especially crude have recovered from December lows but remain soft," said Mr Das in a press conference after release of the policy statement. 
  5. The economic growth is likely to be influenced by improvement in bank credit and overall financial flows to the commercial sectors, though slowing global demand could play a dampener, said the RBI.
  6. Despite of softening crude oil prices and the impact of rupee depreciation on exports, slowing global demand could pose headwinds, the central bank added.
  7. "In particular, trade tensions and associated uncertainties appear to be moderating global growth," it noted.
  8. The growth estimate also stood higher than the Central Statistics Office's (CSO) projection of 7.2 per cent for 2018-19. The CSO's January 7 projection was part of the Ministry of Statistics' "First Advance Estimates of National Income 2018-19" report.
  9. Investment activity is recovering, but supported mainly by public spending on infrastructure, the RBI said, adding that the need is to strengthen private investment activity and buttress private consumption.
  10. The central bank lowered its inflation forecast to 2.8 per cent for the fourth quarter of current financial year. For the coming financial year beginning April 1, it pegged consumer inflation in a range of 3.2-3.4 per cent in the first half, and 3.9 per cent in the third quarter.