RBI Governor Shaktikanta Das
The Reserve Bank on Wednesday retained the GDP growth forecast for the current fiscal at 9.5 per cent but cautioned that the economic recovery is not yet strong enough to be self-sustaining and sustainable. In an address after the three-day meeting of the Monetary Policy Committee (MPC), RBI Governor Shaktikanta Das said that managing a sustainable, robust and inclusive recovery is the central bank’s mission.
“We need to be firm, patient and persistent in our endeavours. We also need to be aware, alert and agile to the new realities that lie ahead of us. Our efforts in the last one year and nine months have given us confidence and a sense of accomplishment. The beginning has been given to face the challenges ahead,” he said.
Das, whose term as governor was recently extended by three years, further said that the Indian economy is in a relatively good position on the path to recovery, but it is vulnerable to global spillovers or a potential surge of infections from new mutations. May not be immune, including with Omicron. Type.
“Therefore, strengthening our macroeconomic fundamentals, making our financial markets and institutions resilient and strong, and creating credible and consistent policies will be top priorities in these uncertain times,” Das said.
According to him, incoming inputs indicate that consumption demand is improving, with demand picking up from the festive season. Rural demand is showing resilience and agricultural employment is on the rise with strong performance from agriculture and allied activities.
Das said the recent cut in excise duty and state VAT on petrol and diesel should support consumption demand by increasing purchasing power.
“… the real GDP growth forecast has been retained at 9.5 per cent in 2021-22, including 6.6 per cent in Q3 and 6.0 per cent in Q4 of 2021-22,” he said.
Real GDP growth is projected at 17.2 per cent for the first quarter and 7.8 per cent for the second quarter of 2022-23.
The governor also emphasized that the recovery that has been disrupted by the second wave of the pandemic is gaining traction again, but it is not yet strong enough to be self-sustaining and sustainable.
“This underscores the critical importance of continued policy support,” he said.
The governor said the risk of a downturn in the outlook increased with the emergence of Omicron and a resurgence of COVID infections in several countries.
Despite some recent corrections, potential volatility in global financial markets due to the rapid normalization of monetary policy in advanced economies, and prolonged global supply constraints, international energy and commodity prices continue to rise.
Last month, the National Statistical Office (NSO) had projected the gross domestic product (GDP) growth for the second quarter of the current fiscal at 8.4 per cent year-on-year. All components of GDP registered year-on-year growth, with exports and imports firmly surpassing their pre-COVID levels.
Meanwhile, Fitch Ratings on Wednesday slashed India’s economic growth forecast for the current fiscal to 8.4 per cent but raised the forecast for the next fiscal to 10.3 per cent. Fitch in October had forecast a growth of 8.7 per cent for the current fiscal and 10 per cent for 2022-23.
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