RBI Retains GDP Forecast for FY22 At 9.5%; Raises Estimates For Q1 Period

The Reserve Bank of India (RBI) on August 6, 2021 retained GDP forecast at 9.5 percent for the ongoing fiscal year. In its third bi-monthly policy meet for the fiscal year 2022, the RBI kept key policy rate unchanged at 4 percent, while reverse repo rate also continues to be at 3.35%.

RBI Retains GDP Forecast for FY22 At 9.5%

The GDP growth projection for FY22 has been kept unchanged after the RBI raised its estimates for Q1FY22 period, but revised estimates lower for the rest of the three quarters.

RBI GDP Estimates:

	Current	Earlier
FY22	9.5%	9.5%
Q1	21.4%	18.5%
Q2	7.3%	7.3%
Q3	6.3%	7.2%
Q4	6.1%	6.6%

Domestic economic activity has started normalising with the ebbing of the second wave of the virus and the phased reopening of the economy. High-frequency indicators suggest that (i) consumption (both private and Government), (ii)investment and (iii) external demand are all on the path of regaining traction, said the RBI governor's statement.

External demand remained buoyant during Q1:2021-22 and was reflected in increasing exports, lending critical support to aggregate demand. Strong external demand is an opportunity for India and further policy support should help in capitalising on this. Global commodity prices and episodes of financial market volatility, together with vulnerability to new waves of infections are, however, downside risks to economic activity. Taking all these factors into consideration, projection of real GDP growth is retained at 9.5 per cent in 2021-22 consisting of 21.4 per cent in Q1; 7.3 per cent in Q2; 6.3 per cent in Q3; and 6.1 per cent in Q4 of 2021-22. Real GDP growth for Q1:2022-23 is projected at 17.2 per cent, added the statement further.