Tapering Covid: Monetary policy to be retained against volatility
Thu, Jun 3 2021 12:33 IST |
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Reserve Bank of India (RBI). (File Photo: IANS). Image Source: IANS News
Mumbai, June 3 : Prevailing onslaught from Covid s second wave as well as persistently high prices will deter the Reserve Bank of India (RBI) from initiating any tapering exercise, experts told IANS.
Besides, economy watchers have ruled out any reduction in key lending rates during the first monetary policy review coming after one of worst phases of Covid-19 pandemic.
Accordingly, RBI s monetary policy committee (MPC) is expected to retain rates as well as the current accommodative stance due to growth concerns amidst resurgence of Covid-19.
RBI Monetary Policy Committee likely to retain repo rate, accommodative stance, say experts
Photo Credit: PTI
Prevailing onslaught from COVID s second wave as well as persistently high prices will deter the Reserve Bank of India (RBI) from initiating any tapering exercise, experts told
IANS.
Besides, economy watchers have ruled out any reduction in key lending rates during the first monetary policy review coming after one of worst phases of COVID-19 pandemic.
Accordingly, RBI s monetary policy committee (MPC) is expected to retain rates as well as the current accommodative stance due to growth concerns amidst resurgence of COVID-19. We estimate the average CPI inflation to moderate to 5.2 percent in FY2022 from 6.2 percent in FY2021. Nevertheless, it will remain well above the mid-point of the MPC s renewed medium term target range of 2-6 percent, ruling out the possibility of further rate cuts to support economic activity and sentiment, ICRA s Chief Economist Aditi Nayar t
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The Covid-induced volatility heavily dented India s economy in the last fiscal as its growth rate plunged (-) 7.3 per cent in FY 2020-21.
Accordingly, the pandemic-triggered national lockdown (from late March 2020) during Q1FY21 had a massive impact on the economy, which suffered a GDP contraction of 24.4 per cent. It was only on June 1, 2020 that the partial unlock measures were implemented.
Nonetheless, the devastating impact on consumer services, urban demand and rising commodity prices had more or less painted a grim economic picture for FY21.
The data furnished by the National Statistical Office (NSO) showed that real GDP or Gross Domestic Product at constant (2011-12) prices in 2020-21 attained a level of Rs 135.13 lakh crore, as against the first revised estimate of GDP for the year 2019-20 of Rs 145.69 lakh crore.
Covid Casualty: India s YoY FY21 GDP records -7.3%
India s economy was severely battered by Covid-induced instability in the last fiscal year, with its growth rate plummeting to Minus -7.3 per cent.
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The Covid-induced volatility heavily dented India s economy in the last fiscal as its growth rate suffered heavily registering (minus) -7.3 per cent in FY 2020-21. The the GDP had grown by 4 per cent in 2019-20, before the Covid pandemic hit the world.
Accordingly, the pandemic-triggered national lockdown (from late March 2020) during Q1FY21 had a massive impact on the economy, which suffered a GDP contraction of 24.4 per cent. It was only on June 1, 2020 that the partial unlock measures were implemented.