Representational image.  |  Photo Credit: PTI
- While retaining its growth outlook for FY22 at 10.5 per cent, the MPC did, however, acknowledge the increasing uncertainty stemming from the resurgence of the SARS-CoV-2 virus across the country
- In a show of some optimism, the RBI retained in GDP growth forecast of 10.5 per cent for 2021-22 noting that the country was now better prepared to deal with the COVID-19 outbreak amid the government's continuing immunisation drive
- The central bank stated that removal or reduction of excise duties, cesses and state-level taxes, many of which were either introduced or expanded in the latter half of 2020, could put much-needed downward pressure on prices of petroleum products
The Reserve Bank of India's six-member Monetary Policy Committee, on the heels of a three-day meet, decided to keep interest rates unchanged with RBI Governor Shaktikanta Das noting that the central bank has seen fit to continue its “accommodative stance” in support of India's economic recovery.
The central bank also announced Rs 1 lakh crore in government bond purchases from the secondary market in order to keep long term rates steady.
The decision to keep the repo rate unchanged at 4 per cent in the first meet of the financial year was the fifth time the MPC has done so since May. The reverse repo rate was also left unchanged at 3.35 per cent.
While retaining its growth outlook for FY22 at 10.5 per cent, the MPC did, however, acknowledge the increasing uncertainty stemming from the resurgence of the SARS-CoV-2 virus across the country that has now seen several states return to the implementation of lockdowns in various formulations.
Das noted that “the MPC judged that monetary policy should remain accommodative till prospects of sustained recovery are well secured.” In February, the annual Consumer Price Index-based retail inflation spiked to a three-month high of 5.03 per cent. As per the RBI's projections, retail inflation was expected to hover around 5 per cent next year as well, being pegged at 5 per cent in Q4 of FY21, 5.2 per cent in Q1 and Q2 of FY22, 4.4 per cent in Q3 of FY22 and 5.1 per cent in Q4 of FY22.