GDP growth may turn positive by Q4 FY21, real GDP to contract by 9.5% in the current fiscal, says Das

GDP growth may turn positive by Q4, real GDP to contract by 9.5% in the current fiscal, says Das

The Reserve Bank of India on Friday said that the economy was likely to contract by 9.5 per cent in the current fiscal.

However, Das mentioned that the growth is likely to pick up in the second half of the fiscal and enter into the positive zone in the January-March quarter. GDP contracted 23.9 per cent in the first quarter of the fiscal, as per the estimates of the Central Statistics Office (CSO).

In a statement after the meeting of the Monetary Policy Committee, RBI Governor Shaktikanta Das said that the Indian economy was entering into a decisive phase in the fight against coronavirus.

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Das also added that contraction in economic growth witnessed in the April-June quarter of the fiscal is "behind us" and silver linings are visible, and highlighted the uptick in the manufacturing sector, and energy consumption, among others.

According to him, inflation too was likely to ease to the target level in the fourth quarter of 2020-21.

The retail inflation (CPI), which the RBI factors in its monetary policy, has remained above 6 per cent in the recent months. The government has tasked RBI to keep the inflation at 4 per cent, with a margin of 2 per cent on either side.

The Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday left the key policy repo rate unchanged at 4%. The Reverse Repo rate also remained unchanged at 3.3%.

RBI has reduced the repo rate by 115 bps in 2020 on the back of 135 bps of rate cuts in 2019 and has maintained an accommodative stance despite the worryingly high inflation levels due to a near-collapse of the economy.

The spread of coronavirus and resultant lockdown had severely hit the economic activities in the country.

(With PTI inputs)