RBI Monetary Policy: The Reserve Bank of India (RBI) in its Monetary Policy Committee (MPC) review meeting announced the gross domestic product (GDP) growth for the next fiscal year at a record low of 10.5 per cent. The economic growth figure projected by the central bank committee is lower than the figures predicted by the International Monetary Fund (IMF) and the Economic Survey. The International Monetary Fund projected the economic growth at 11.5 per cent, while the economic survey 2021, presented by Chief Economic Advisor KV Subramanian projected it at 11 per cent. According to the Monetary Policy Committee, the real GDP growth is projected at 10.5 per cent in 2021-22 – in the range of 26.2 to 8.3 per cent in the first half, and six per cent in the third quarter.
RBI Governor Shaktikanta Das said that the central bank will maintain an accommodative stance for as long as required, in view of keeping the economic recovery on track amid the COVID-19 crisis. Mr Das announced that the repo rate and reverse repo rates are unchanged at four per cent and 3.35 per cent , respectively. The central bank governor said the six members of the monetary policy committee (MPC) were unanimous in their decision to keep rates on hold. (Follow LIVE Updates: RBI Governor-Led MPC Keeps Repo Rate Unchanged At 4%, Ensures Ample Liquidity )
According to the RBI Monetary Policy Committee, the signs of economic recovery have strengthened further since the last meeting of the committee in December 2020. The RBI's survey points towards an improvement in capacity utilisation in the manufacturing sector to 63.3 per cent in the second quarter of this financial year from 47.3 per cent in the year-ago period. The electricity and energy demand reflects a broader normalisation of economic activity than in December 2020, even amid fears of a second wave of COVID-19.
The manufacturing, services, and composite purchasing managers' indices (PMI) are in expansion zones – the manufacturing PMI rose to 57.7 in January 2021 from 56.4 in December 2020, and the services PMI rose to 52.8 in January 2021 from 52.3 in December 2020. Meanwhile, the economy contracted by 7.5 per cent in the second quarter of the current financial year, resulting in the country entering into a technical recession, amid the COVID-19 pandemic. In the April-June period of last year, the economy had contracted by a record 23.9 per cent.