The Indian economy will contract 9.5% in fiscal 2021 due to disruptions caused by the COVID-19 pandemic, according to Shaktikanta Das, Governor, Reserve Bank of India.
Mr. Das added, growth “may break out of contraction and turn positive during January-March” hinting at improving signs of recovery.
The MPC continued to maintain an accommodative stance to revive growth on a durable basis and mitigate the impact of COVID-19 disruptions.
According to the World Bank, India’s GDP growth is likely to contract 9.6% in FY21, it revised its forecast of 3.2%. Fitch has estimated a contraction of 10.5%.
India’s inflation based on consumer price index (CPI) was 6.69% in August from 6.73% in July. The MPC aims to keep the retail inflation close to 4%.
Mr. Shaktikanta Das stated in the three day Monetary Policy Commitee meeting that ended today. The RBI has kept the repo rate unchanged at 4% p.a. and reverse repo at 3.5% p.a.
