New Delhi: Announcing its third bi-monthly monetary policy of 2019-20, the Reserve Bank of India (RBI) on Wednesday revised GDP growth for 2019-20 downwards to 6.9 percent from 7.0 percent announced in the June policy.
In the MPC’s June resolution, real GDP growth for 2019-20 was projected at 7.0 percent – in the range of 6.4-6.7 percent for H1:2019-20 and 7.2-7.5 percent for H2 – with risks evenly balanced.
“Various high frequency indicators suggest weakening of both domestic and external demand conditions. The Business Expectations Index of the Reserve Bank’s industrial outlook survey shows muted expansion in demand conditions in Q2, although a decline in input costs augurs well for growth. The impact of monetary policy easing since February 2019 is also expected to support economic activity, going forward. Moreover, base effects will turn favourable in H2:2019-20,” RBI said in a statement.
“Taking into consideration the above factors, real GDP growth for 2019-20 is revised downwards from 7.0 percent in the June policy to 6.9 percent – in the range of 5.8-6.6 percent for H1:2019-20 and 7.3-5 7.5 percent for H2 – with risks somewhat tilted to the downside; GDP growth for Q1: 2020-21 is projected at 7.4 percent” RBI said.
Announcing its third bi-monthly policy RBI said, the repo rate under the liquidity adjustment facility (LAF) has been reduced by 0.35 basis points to 5.40 percent from 5.75 percent with immediate effect.
Consequently, the reverse repo rate under the LAF stands adjusted to 5.15 percent, the marginal standing facility (MSF) rate and the Bank Rate to 5.65 percent and the CRR rates remain at 4 percent, the Central Bank added.