FY21 GDP rate seen at 6%: RBI

FY21 GDP rate seen at 6%: RBI
The Reserve Bank of India (RBI) said in the statement that India’s GDP growth for 2020-21 is projected at 6% – in the range of 5.5-6% in H1 and 6.2% in Q3.

The real GDP growth for 2019-20 was projected in the December 2019 policy at 5% - 4.9-5.5% in H2.  GDP growth for H1:2020-21 was projected at 5.9-6.3%, the central bank said.

For 2020-21, the growth outlook will be influenced by several factors. First, private consumption, particularly in rural areas, is expected to recover on the back of improved rabi prospects. The recent rise in food prices has shifted the terms of trade in favour of agriculture, which will support rural incomes.
Second, the easing of global trade uncertainties should encourage exports and spur investment activity. The breakout of the coronavirus may, however, impact tourist arrivals and global trade.
Third, monetary transmission in terms of a reduction in lending rates and financial flows to the commercial sector has progressed vis-à-vis the last policy, and this could spur both consumption and investment demand. Fourth, the rationalisation of personal income tax rates in the Union Budget 2020-21 should support domestic demand along with measures to boost rural and infrastructure spending.
Today, the RBI kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.15%. Dr. Chetan Ghate, Dr. Pami Dua, Dr. Ravindra H. Dholakia, Dr. Janak Raj, Dr. Michael Debabrata Patra and Shri Shaktikanta Das voted in favour of the decision.

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