Governor of the Reserve Bank of India (RBI) Shaktikanta Das stated on Friday that the GDP for 2021-22 is expected to be 9.5 percent. This has been determined by taking into account all good factors that have emerged as a result of the Coronavirus pandemic, such as the business sector’s adaptation to the circumstances and anticipation of a regular monsoon, as well as a reduction in urban demand.
The GDP is expected to be 18.5 percent in the first quarter, 7.9 percent in the second, 7.2 percent in the third, and 6.6 percent in the fourth quarter of this fiscal year. The RBI had previously predicted 10.5 percent GDP growth for 2021-2022. It had predicted 26.2 percent growth in the first quarter, far higher than the reduced figure of 18.5 percent.
Similarly, the central bank has trimmed its second-quarter forecast to 7.9% from 8.3% previously. It had previously estimated third-quarter growth at 5.4 percent and fourth-quarter growth at 6.2 percent, both lower than Friday’s predictions.
Despite the raging second wave of the Coronavirus pandemic, Mr. Das stated in his near half-hour speech that the GDP predictions were based on certain good developments.
People and businesses were adapting to current working conditions, according to the RBI chief, who listed several good trends. As manufacturing and services activity weakened due to restrictions imposed by most states, urban demand, as reflected in some high-frequency indicators like electricity consumption, railway freight traffic, port cargo, steel consumption, cement production, e-way bills, and toll collections, showed sequential moderation during April-May 2021.
“Indicators of mobility fell in April and May, although they are still higher than they were during the first wave of the year. Domestic monetary and financial circumstances are still very favorable and supportive of economic growth. Furthermore, the vaccination process is projected to pick up steam in the coming months, which would aid in the normalization of economic activity “The Governor of the Reserve Bank of India remarked.
He went on to say that as external demand improves, global commerce is rebounding, which should help India’s export sector.
“Global demand is projected to improve even more as a result of fiscal stimulus packages and rapid vaccine progress in advanced nations. India’s exports are expected to increase in March, April, and May 2021. External conditions are building that are favorable for a long-term recovery beyond pre-pandemic levels “Mr. Das went on to say more.
With these considerations in mind, the Governor stated that more and targeted governmental support for exports is urgently needed. Now is the time to give the policy a boost by focusing on quality and scalability.
“Consequently, despite the sequential decrease in rural demand indicators in April, rural demand is projected to remain strong as the projection of a normal monsoon bodes well for maintaining its buoyancy in the future. However, the increased distribution of COVID-19 infections in rural areas poses a risk. Taking all of these things into account, real GDP growth in 2021-22 is now expected to be 9.5 percent “he stated.