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RBI maintains FY22 GDP growth target at 9.5%; experts weigh in

economy | IST

RBI maintains FY22 GDP growth target at 9.5%; experts weigh in

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The Reserve Bank of India (RBI) on Friday kept the GDP growth forecast for FY22 unchanged at 9.5 percent. RBI Governor Shaktikanta Das said on Friday, while announcing the third bi-monthly monetary policy review, said that economic recovery remains uneven across sectors and needs to be supported by all policymakers. H added that said RBI remains in "whatever it takes" mode, with a readiness to deploy all its policy levers - monetary, prudential or regulatory.

The Reserve Bank of India (RBI) on Friday kept the GDP growth forecast for FY22 unchanged at 9.5 percent. RBI Governor Shaktikanta Das said on Friday, while announcing the third bi-monthly monetary policy review, said that economic recovery remains uneven across sectors and needs to be supported by all policymakers. H added that said RBI remains in "whatever it takes" mode, with a readiness to deploy all its policy levers - monetary, prudential or regulatory.

Soumya Kanti Ghosh, Group Chief Economic Advisor of State Bank of India said, “The RBI has actually upped the inflation forecast and lowered the growth forecast in the Q3 and Q4. At the same point of time, the central bank is saying that growth is gaining traction in the short term. So basically, if we try to combine the two statements - that growth in the gain in traction, which the economy is showing currently may actually fizzle out over a point of time if broad-based policy actions are and not taken, this is the point number one."
Ananth Narayan, Professor at SPJIMR said, “Dissent was expected at some stage given that inflation is about the upper tolerance limit of the MPC, dissent is expected. On the higher inflation expectations, I think it is actually a positive given particularly that Q2 and Q3 inflation forecasts are being put on the higher side that gives a lot of wiggle room for the MPC even if you see higher prints on inflation, to stay the course on staying accommodative.”
Neeraj Gambhir, President, Head Treasury & Markets at Axis Bank said, “While the policy was pretty much on the expected lines in terms of its clarity and the language and the actions taken, I think what the Reserve Bank has allowed to do outside the policy is also equally important.”
“As far as loan pricing is concerned, I think the fact that there is abundant amount of liquidity in the system and the short term rates continue to be extremely low. The overnight rate is very close to the reverse repo rate, and that is determining the entire shorter end of the yield curve. So, effectively the entire pricing of short term loans, whether it is CPs, loans, or other instruments is all driven by the reverse repo rate right now effectively means that there isn't going to be a lot of change as far as the short term rates is concerned and the loan pricing is concerned.”
SS Mallikarjuna Rao, MD & CEO of PNB said, “I do agree with Mr. Gambhir what he said about interest rates, there are two dimensions one dimension is RBI by continuing with the repo rate, and also extending the TLTRO have sent the message with respect to continuation of liquidity currently available in the market to continue for some more time. So it clearly indicates that the expectation of RBI that the growth appearance to them, visibility to them still requires some more time.”
For full interview, watch accompanying video
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