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BUSINESS EYE DECEMBER 17, 2021 | The Indian Eye 42

rbi plays wait and watch amid concerns

about omicron and signs of boost in growth

The economic growth is projected to remain strong in 2022-23. The real GDP growth is projected at

17.2% in the first quarter of the financial year beginning April 2022

OuR BuREAu
New Delhi

mid growing concern about
the impact of the new strain
aof Coronavirus on the econo-
my the Reserve Bank of India (RBI)
on Wednesday stuck to its “wait and
watch” policy keeping the key lending
rates unchanged for the ninth consec-
utive time.
In its bi-monthly policy review,
the central bank decided to keep the
repo rate unchanged at 4 per cent.
The repo rate is the interest rate at
which the RBI lends short-term funds
to banks. According to RBI Gov-
ernor Shaktikanta Das, the central
bank’s Monetary Policy Committee
has unanimously decided to maintain
the status quo on policy repo rate by
a majority of 5 to 1 to retain the “ac-
commodative policy stance”.
The RBI has maintained a status
quo on these key policy rates for the
past one-and-a-half year. The last time
the RBI changed the policy rate was
in May 2020. The central bank had
slashed the key policy rates in May 2020
to historic lows to support the econo- Reserve Bank of India (RBI) Governor Shaktikanta Das speaks at the Monetary Policy Committee (MPC) meeting, in Mumbai on Wednesday (ANI)
my hit by the COVID-19 pandemic.
Elaborating on the rationale for
maintaining status quo on the policy cost-push build-up. nancial year beginning April 2022 and cent, and printing in at around 10.5
rate and the ‘accommodative stance’, The bank also said on Wednesday 7.8 per cent in the July-September per cent.
Das said: “economic activity is broad- that India’s Gross Domestic Product quarter of 2022-23. As a policy, Credit Suisse does
ly evolving in line with its assessment (GDP) is expected to grow by 9.5 per “The recovery that had been in- not provide absolute growth numbers
in October, the MPC was of the view cent and consumer price inflation is terrupted by the second wave of the in its forecast. However, an extrapola-
that the sharp and sustained reduc- projected to remain at 5.3 per cent in pandemic is regaining traction, but it tion of data available and projections
tion in new COVID-19 infections and the current financial year. is not yet strong enough to be self-sus- indicate that economic growth could
the rise in vaccination coverage are The economy is projected to ex- taining and durable. This underscores clip 9 per cent in 2022-23 period,
contributing to consumer confidence pand by 6.6 per cent in the third quar- the vital importance of continued pol- which according to the brokerage is
and business optimism. The prospects ter and by 6 per cent in the fourth icy support,” said Das. up to 400 basis points (bps) over the
for economic activity are steadily im- quarter of 2021-22. So far, the official Inflation is expected to remain in consensus numbers.
proving, including for contact-inten- figures for the first two-quarters of the RBI’s target range of 4-6 per cent. On the markets, he said since the
sive services that were hit hard by the the current fiscal have been released. Consumer Price Index (CPI) inflation country’s price-to-earnings premium
pandemic.” The GDP expanded by 20.1 per cent is projected at 5.3 per cent for the fi- of 21 per cent over global equities
On inflation, the MPC noted the during the first quarter and 8.4 per nancial year 2021-22. and 72 per cent over the emerging
supply-side measures taken by the cent in the second quarter of 2021- Meanwhile, Swiss brokerage markets is already too high, further
government to contain food prices as 22, year-on-year. The positive growth Credit Suisse expects the economy to upside in the metric is unlikely.
also the calibrated reductions in cen- numbers come after a sharp contrac- continue to show positive surprises In the first half of the current fis-
tral excise duties and state Value Add- tion recorded in 2020-21. and record up to 9 per cent growth cal, revenue receipts were 16 per cent
ed Taxes (VAT) on petrol and diesel. The economic growth is project- in the next fiscal. For the current fi- higher than the full year estimates and
Crude oil prices have also softened ed to remain strong in 2022-23. The nancial year too, the brokerage an- the central government’s cash balanc-
since end-November. These would real GDP growth is projected at 17.2 ticipates growth to be higher than es with the RBI are 1.5-2 per cent high-
alleviate, to an extent, the domestic per cent in the first quarter of the fi- the consensus forecast of 8.4-9.5 per er than normal as a share of the GDP.

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