RBI Retains GDP Growth Projection for FY22 at 9.5%, Repo Rate Unchanged

"The economy is recovering from the setback of the second phase of COVID-19," RBI Governor Shaktikanta Das said.

RBI Governor Shaktikanta Das. 

(Photo: Altered by The Quint)

The Reserve Bank of India on Friday, 6 August, retained the GDP growth projection for financial year 2021-22 (FY22) at 9.5 percent, and kept the repo rate unchanged at 4 percent.

Maintaining an accommodative stance, RBI Governor Shaktikanta Das was quoted as saying, "The economic activity has broadly evolved along the lines of the Monetary Policy Committee's (MPC) expectations in June and the economy is recovering from the setback of the second phase of COVID-19."

The reverse repo rate has also been kept unchanged at 3.35 percent.

Announcing that CPI inflation seen at 5.7 percent in 2021-22, to fall to 5.1 percent in the first quarter of 2022-23, Das emphasised, "We are in midst of extraordinary situation arising out of the pandemic, and will require policy support from all sides to nurture recovery​."

Aimed at Prioritising Growth

Das announced that interest rates will be kept unchanged at 4 percent by the RBI to continue with the accommodative stance as long as necessary.

He added that this action is, "aimed at prioritising growth and addressing distress in economy."

Moreover, adding that COVID vaccination will influence the economy, Das stressed that "economic activity will pick up on vaccination."

Economic activity, Das said, is normalising with the ebbing of the 2nd wave, with consumption, investment, and external demand on path of regaining traction.

Further, the RBI will conduct open market purchase of government securities of Rs 25,000 crore on 12 August under the G-sec Acquisition Programme (G-SAP 2.0). The result of the auctions will be announced the same day.

Inflation Projections

Das said, "CPI inflation is projected at 5.7 percent during 2021-22, this consists of 5.9 percent in Q2, 5.3 percent in Q3 and 5.8 percent in Q4 of 2021-22 with risks broadly balanced. For the first quarter of 2022-23 CPI inflation is projected at 5.1 percent."