The Reserve Bank of India projected Indian economy to grow as much as 26.2 per cent during the first half of the upcoming financial year. In its monetary policy announcement, the central bank expected measures to boost economic activity in the backdrop of the coronavirus pandemic and decisions of the latest Union Budget to drive growth momentum.
Considering various factors at play, 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 H1 and 6.0 per cent in Q3, RBI's Monetary Policy Committee (MPC) stated in its growth outlook.
"Turning to the growth outlook, rural demand is likely to remain resilient on good prospects of agriculture. Urban demand and demand for contact-intensive services is expected to strengthen with the substantial fall in COVID-19 cases and the spread of vaccination. Consumer confidence is reviving and business expectations of manufacturing, services and infrastructure remain upbeat," noted the MPC in its policy statement.
"The fiscal stimulus under AtmaNirbhar 2.0 and 3.0 schemes of government will likely accelerate public investment, although private investment remains sluggish amidst still low capacity utilisation. The Union Budget 2021-22, with its thrust on sectors such as health and well-being, infrastructure, innovation and research, among others, should help accelerate the growth momentum," it further added.
During the last monetary policy meeting of this financial year, the panel unanimously decided to keep the policy repo rate unchanged at 4 per cent. All members voted in favour of retaining the accommodative stance for as long as required - at least of for the rest of the current fiscal and the next financial year - "to revive growth on a durable basis and mitigate the impact of COVID-19 on the economy while ensuring that inflation remains within the target going forward".