MPC meet: RBI revises GDP forecast to 5%; says economic growth has weakened further
Since February, RBI has revised its GDP growth projections for financial year 2020 from 7.4 per cent in February to 5 per cent now, which is sharpest such revision in the recent years
- Dec 5, 2019,
- Updated Dec 5, 2019 9:01 PM IST
Contrary to the expectations of a 25 basis point cut, the Reserve Bank of India's Monetary Policy Committee (MPC) sprung a surprise on Thursday by keeping the key policy rates unchanged at 5.15 per cent but reduced its GDP forecast for the financial year 2020 to 5 per cent from 6.1 per cent earlier. The MPC also accepted that economic growth has weakened further and output gap remains "negative".
"The real GDP growth for 2019-20 is revised downwards from 6.1 per cent in the October policy to 5.0 per cent - 4.9-5.5 per cent in H2 and 5.9-6.3 per cent for H1:2020-21," the central bank said.
The GDP has been on a downward spiral for the last six quarters. In the September quarter of this fiscal, the GDP growth slipped further to hit an over six-year low of 4.5 per cent, impacted by a slump in manufacturing output, which contracted by 1 per cent. The economic growth has moderated from the 5 per cent rate in the April-June quarter of this fiscal and 7 per cent in the July-September quarter of 2018.
Contrary to the expectations of a 25 basis point cut, the Reserve Bank of India's Monetary Policy Committee (MPC) sprung a surprise on Thursday by keeping the key policy rates unchanged at 5.15 per cent but reduced its GDP forecast for the financial year 2020 to 5 per cent from 6.1 per cent earlier. The MPC also accepted that economic growth has weakened further and output gap remains "negative".
"The real GDP growth for 2019-20 is revised downwards from 6.1 per cent in the October policy to 5.0 per cent - 4.9-5.5 per cent in H2 and 5.9-6.3 per cent for H1:2020-21," the central bank said.
The GDP has been on a downward spiral for the last six quarters. In the September quarter of this fiscal, the GDP growth slipped further to hit an over six-year low of 4.5 per cent, impacted by a slump in manufacturing output, which contracted by 1 per cent. The economic growth has moderated from the 5 per cent rate in the April-June quarter of this fiscal and 7 per cent in the July-September quarter of 2018.