Reserve Bank of India (RBI) maintains the country’s GDP growth rate at 9.5pc.
RBI’s August bi-monthly report notes an improvement in capacity utilization, rise in steel consumption, higher imports of capital goods amid congenial monetary and financial conditions. However, investment demand is still anemic. The economic packages announced by the union government are expected to kick-start a long-awaited revival, stated the report.
The RBI has maintained an accommodative stance and kept most of the policy unchanged, citing that any hasty withdrawal could disturb economic growth. India is in a much better position now when compared to June 2021, said the RBI Governor Shaktikanta Das while presenting the bi-monthly update. He, however, has advised caution amid the possibility of a third wave.
As the second wave of the pandemic ebbs, restrictions are easing, and India is recovering slowly. Vaccine manufacturing and administration are steadily rising. High-frequency indicators have started to show economic progress in the country. Outlook for aggregate demand in India is improving, said Das, but the core conditions are still weak. To bring a balance between supply-demand in the various sectors more efforts are needed. Rural demand is expected to be buoyant, while urban demand would pick up with the pace of vaccination.
Consumer Price Index (CPI) inflation is projected at 5.7pc for 2021-22. CPI inflation in the first quarter of 2022-23 is forecast at 5.1pc.
Key interest rates are unchanged, and the repo rate is kept unchanged at 4pc.