The RBI on Friday said that real GDP growth for 2020-21 was projected as being -7.5%. Speaking at an online briefing at the end of the meeting of the Monetary Policy Committee, RBI Governor Shaktikanta Das said that recovery continued to remain clouded amid the recent rise in COVID-19 cases.
"The real GDP growth for 2021 is projected at minus 7.5%. The recovery in rural demand is expected to strengthen further while urban demand is also gaining momentum," said Das.
On Friday, the RBI maintained status quo for the third time in a row and kept the benchmark lending rate unchanged at 4%. The Marginal Standing Facility (MSF) rate and the bank rate remain unchanged at 4.25% while the reverse repo rate remains unchanged at 3.35%.
The MPC, Das said, had decided to continue with an accommodative stand on monetary policy for as long as necessary to revive growth on a durable basis and to mitigate the impact of COVID-19 while ensuring that inflation remains within target. This in turn opens up possibilities for future rate cuts.
For the uninitiated, real GDP refers to the inflation-adjusted measure that reflects the value of all goods and services produced by an economy.
Amid the COVID-19 pandemic, India had, for the first time in history moved into a period of recession. In November, after two successive quarters of GDP contraction, the RBI bulletin had revealed that India had entered what is called a technical recession in the first half of 2020-21.
At the end of August this year, data from the National Statistical Office showed that India's GDP shrank by 23.9% in the April-June period of this year - the steepest ever decline. And in the July-September quarter of 2020-21, data released by the National Statistics Office showed that the Indian economy had contracted 7.5% as compared to the same quarter last year.
While many remain concerned, the RBI expects the situation to continue to improve and shift into positive growth over the next two quarters. "We are projecting GDP growth for Q3 at +0.1% and +0.7% for Q4," said RBI Governor Shaktikanta Das.
Further details awaited.