The Reserve Bank of India (RBI), the country’s central bank, has projected India’s real GDP growth at 9.5 per cent in 2021-22 consisting of 18.5 per cent in Q1; 7.9 per cent in Q2; 7.2 per cent in Q3; and 6.6 per cent in Q4 of 2021-22. The RBI has kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 per cent.

On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) of the RBI at its meeting today also decided to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.

Speaking on the growth outlook, RBI governor Shaktikanta Das said rural demand remains strong and the expected normal monsoon bodes well for sustaining its buoyancy, going forward. The increased spread of COVID-19 infections in rural areas, however, poses downside risks. Urban demand has been dented by the second wave, but adoption of new COVID-compatible occupational models by businesses for an appropriate working environment may cushion the hit to economic activity, especially in manufacturing and services sectors that are not contact intensive.

On the other hand, “the strengthening global recovery should support the export sector. Domestic monetary and financial conditions remain highly accommodative and supportive of economic activity. Moreover, the vaccination process is expected to gather steam in the coming months and should help to normalise economic activity quickly,” Das said while announcing the decisions of the MPC.