RBI retains GDP growth target at 9.5 pc for FY22

The Reserve Bank of India (RBI) on Friday retained real GDP growth at 9.5 per cent in 2021-22 as domestic economic activity is starting to recover with the ebbing of Covid-19’s second wave.

This consists of 21.4 per cent in Q1, 7.3 per cent in Q2, 6.3 per cent in Q3 and 6.1 per cent in Q4. Real GDP growth for Q1:2022-23 is projected at 17.2 per cent, said RBI Governor Shaktikanta Das after a three-day meeting of its Monetary Policy Committee (MPC).

Looking ahead, he said, agricultural production and rural demand are expected to remain resilient.
“Urban demand is likely to mend with a lag as manufacturing and non-contact intensive services resume on a stronger pace, and the release of pent-up demand acquires a durable character with an accelerated pace of vaccination.”

Das said buoyant exports, the expected pick-up in government expenditure, including capital expenditure, and the recent economic package announced by the government will provide further impetus to aggregate demand.

“Although investment demand is still anaemic, improving capacity utilisation and congenial monetary and financial conditions are preparing the ground for a long-awaited revival.”

Firms polled in RBI surveys expect expansion in production volumes and new orders in Q2:2021-22 which is likely to sustain through Q4.
However, said Das, elevated levels of global commodity prices and financial market volatility are the main downside risks.

He said the recovery remains uneven across sectors and needs to be supported by all policy makers. The RBI remains in whatever it takes’ mode with a readiness to deploy all its policy levers — monetary, prudential or regulatory.

“In parallel, our focus on preservation of financial stability continues. At this juncture, our overarching priority is that growth impulses are nurtured to ensure a durable recovery along a sustainable growth path with stability.”