RBI pegs FY21 GDP growth at 6%, says private consumption, income tax cut to drive growth

The Reserve Bank of India's Monetary Policy Committee (MPC) Thursday has set its GDP growth forecast for FY21 to 6%. It was 5% in FY20. The MPC has kept the GDP forecast in the range of 5.5-6% in H1 and 6.2% in Q3.

The MPC in its latest policy announcement on Thursday kept the key policy rates unchanged at 5.15%.

In December, the Reserve Bank of India (RBI) had revised its GDP growth projection for FY20 to 5% from 6.1% earlier. The central bank's Monetary Policy Committee (MPC) which kept the policy rates unchanged at 5.15% had also accepted that the economic growth had weakened further with the output gap remaining "negative".

Also Read: MPC meet: RBI maintains status quo, keeps repo rate unchanged at 5.15%

"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 had said.

This was in line with the Central Statistics Office's (CSO) advance estimate which pegged GDP growth rate at 5%. Meanwhile, the Economic Survey has projected economic growth at 6-6.5% for FY21.

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 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.

Also Read: MPC meet: RBI maintains status quo, keeps repo rate unchanged at 5.15%