E-Paper
RBI lowers GDP growth projection to 7.2 from 7.4 per cent
The February policy had projected the GDP grown at 7.4 per cent, however, due to weakening in domestic investment, it has been reduced to 7.2 per cent.
At its first bi-monthly monetary policy review of the new fiscal on Thursday, the Reserve Bank of India on Thursday said that it was lowering the GDP growth projection for 2019-20 at 7.2 per cent as against the earlier projection of 7.4 per cent.
RBI Governor Shaktikanta Das said that the GDP growth for 2019-20 in the February policy had been projected at 7.4 per cent in the range of 7.2-7.4 per cent, but since then there were some signs of weakening in domestic investment, which was visible in the production and imports of capital goods.
He said keeping in mind various factors such as the moderation of grown in global economy that might impact India’s exports, higher financial flows to the commercial sector etc, the “GDP projection for 2019-20 is kept at 7.2 per cent, 6.8 to 7.1 per cent for the first half of 2019-20 and 7.3 to 7.4 per cent for the second half”.
On its inflation outlook, the RBI said that several uncertainties were influencing it and could have a negative impact. “First, with the domestic and global demand-supply balance of key food items expected to remain favourable, the short-term outlook for food inflation remains benign. However, early reports suggest some probability of El Niño effects in 2019. There is also the risk of an abrupt reversal in vegetable prices, especially during the summer months,” the RBI said.
It also noted that crude oil prices rose about 10 per cent since the last policy was announced.
It said that the economic growth weakened 6.6 per cent in the December quarter. This was the slowest in five quarters, the RBI said. Speaking about retail inflation, the RBI said that it stood at 2.6 per cent in February after four months of continuous decline. Earlier, the RBI had projected a rise of 3.9 per cent by December-end.
“Actual inflation outcomes averaged 2.3 per cent in January-February,” the RBI said.
The next monetary policy statement will come on June 6.
