RBI Lowers Inflation Projection To 5.2% For Q4

Governor Shaktikanta Das sees revival of economic growth with inflation in ‘tolerance band’

RBI Lowers Inflation Projection To 5.2% For Q4
RBI Lowers Inflation Projection To 5.2% For Q4
Our Bureau & PTI - 05 February 2021

The Reserve Bank of India has lowered the retail inflation projection within the “tolerance band” for the fourth quarter of the fiscal 2020-21 at 5.2 per cent. On the economy, the central bank said it is only going to look upwards from here.

The Reserve Bank has the mandate to keep the retail inflation at 4 per cent with a bias of plus/minus 2 per cent on either side. “The inflation (retail) projection is revised to 5.2 per cent for Q4 of the current fiscal,” says RBI Governor Shaktikanta Das and adds that vegetable prices are expected to remain soft in the near term on the back of fresh arrivals in the market.

In its earlier policy decision in December, the apex bank had projected retail inflation to be at 5.8 per cent for the fourth quarter of FY21. For the first half of the next fiscal year, the regulator has projected inflation to be in a band of 5.2-5 per cent. For the third quarter of 2021-22 (October-December), Das says: “We are projecting it (inflation) at 4.3 per cent. We are assessing the risks to be balanced.”

The RBI governor sounds optimistic about a revival in economic growth. “The outlook on growth has improved significantly, with positive growth impulses becoming more broad-based, and the rollout of the vaccination programme in the country auguring well for the end of the pandemic. Given that inflation has returned within the tolerance band, the MPC (Monetary Policy Committee) judged that the need of the hour is to continue to support growth, assuage the impact of COVID-19 and return the economy to a higher growth trajectory,” Das says in a statement.

RBI has projected real GDP growth of 10.5 per cent for 2021-22 – in the range of 26.2 to 8.3 per cent in the first half and 6 per cent in Q3. The economic survey released last week projected the FY22 real GDP growth at 11%.

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