RBI revises GDP growth forecast for 2019-20 to 6.9% from 7.0%

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.