The Reserve Bank of India (RBI) has held the repo rate steady at 6.5% for the second consecutive time, as uncertainty over the future course of monetary policy remains amid high inflation levels. RBI Governor Shaktikanta Das announced the projections for GDP growth and inflation for the fiscal year 2024, with expectations of a 7.2% growth in GDP and a lowered inflation rate of 5.1%.
The Monetary Policy Committee (MPC) meeting took place against a backdrop of declining consumer price-based (CPI) inflation, which hit an 18-month low of 4.7% in April. Despite this easing in headline inflation, the RBI Governor projected that it will remain above the target level of 4% throughout the year.
Governor Das attributed the lowered inflation projection for FY24 to a combination of factors such as supply-side measures, global commodity price trends, and domestic demand conditions. He highlighted that while some supply-side factors will continue to exert upward pressure on inflation, the central bank expects these pressures to be offset by other factors, including an anticipated moderation in global commodity prices.
Furthermore, Das asserted that the decision to maintain the repo rate at 6.5% was guided by the need to ensure a balanced approach between supporting economic growth and managing inflation expectations. Although there are some concerns regarding high inflation levels, the RBI remains confident about India's overall economic outlook.
The projected GDP growth rate of 7.2% for FY24 signifies a steady recovery for the Indian economy after facing multiple headwinds from the COVID-19 pandemic and other external factors. The RBI's optimistic outlook stems from expectations of a strong rebound in private consumption, backed by rising vaccine coverage and easing pandemic-related restrictions.
In addition to the growth and inflation projections, the RBI also announced several measures to support the economy. These include the extension of on-tap liquidity support for contact-intensive sectors and small businesses, as well as targeted interventions to enhance credit flow to specific sectors such as micro, small, and medium enterprises (MSMEs).
Overall, the RBI's decision to maintain the repo rate and lower the inflation projection for FY24 reflects its commitment to striking a balance between promoting growth and managing inflation risks. With a positive outlook for GDP growth and expectations of moderating inflation, the Indian economy appears poised for a strong recovery in the coming fiscal year.
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From where did thus gdp figure comeLike 1