New Delhi: Buoyed by increasing exports, high-frequency data pointing to a positive outlook and widening vaccination coverage, the Reserve Bank of India (RBI) on Friday retained its real GDP growth projection for FY22 at 9.5 per cent while announcing the bi-monthly monetary policy.
As he shared the decisions of the Monetary Policy Committee (MPC) on policy, RBI Governor Shaktikanta Das said that strong external demand is an opportunity for India and further policy support should help in capitalising on this.
He, however, noted that global commodity prices and episodes of financial market volatility together with vulnerability to new waves of infections are downside risks to economic activity.
“Taking all these factors into consideration, projection of real GDP growth is retained at 9.5 per cent in 2021-22 consisting of 21.4 per cent in Q1; 7.3 per cent cent in Q2; 6.3 per cent in Q3; and 6.1 per cent in Q4 of 2021-22. Real GDP growth for Q1:2022-23 is projected at 17.2 per cent,” the RBI Governor said.
Although investment demand is still anemic, improving capacity utilisation, rising steel consumption, higher imports of capital goods, congenial monetary and financial conditions and the economic packages announced by the central government are expected to kick-start a long-awaited revival, said the Governor.
He noted that firms polled in the RBI’s surveys expect expansion in production volumes and new orders in Q2:2021-22 which would sustain through Q4:2021-22, boding well for investment.
“Innovation and working models adopted during the pandemic by businesses will continue to reap efficiency and productivity gains even after the pandemic recedes. This should help trigger a virtuous cycle of investment, employment and growth,” said Das.