New Delhi :
The Reserve Bank on Thursday revised India's Gross Domestic Product (GDP) growth forecast for 2019-20 to 7.2 per cent from its earlier projection of 7.4 per cent. In its first bi-monthly monetary policy for the financial year 2019-20, the central bank lowered India's GDP projection due to the "slowdown in consumption, both public and private." The RBI said that it expected economic growth in the first quarter of the current financial year at 6.8 per cent and 7.4 per cent in the last quarter with "risks evenly balanced".
The central bank, however, Hsaid that the gross fixed capital formation (GFCF) growth remained in double digits for the fifth consecutive quarter in Q3, with the GFCF to GDP ratio rising to 33.1 per cent in Q3 - 2018-19 against 31.8 per cent in Q3 - 2017-18.
Inflation forecast cut to 2.9-3 per cent
Meanwhile, the Reserve Bank cut the retail inflation forecast to 2.9-3 per cent for the first half of current fiscal, mainly due to lower food and fuel prices as well as the expectation of a normal rainy season. In its previous policy outcome in February, the RBI had projected retail inflation between 3.2-3.4 per cent for the first half of 2019-20.
The RBI said that low food inflation during January-February and the fall in the fuel prices will have a bearing on the near-term inflation outlook. "Taking into consideration these factors and assuming a normal monsoon in 2019, the path of CPI inflation is revised downwards to 2.4 per cent in Q4:2018-19, 2.9-3.0 per cent in H1:2019-20 and 3.5-3.8 per cent in H2:2019-20, with risks broadly balanced," the RBI said.
Repo rates cut for the second time ahead of polls
RBI cuts repo rates by 25 basis points to 6 per cent, this is the second time in 2 months that the Indian central bank has cut lending rates. It was the first back-to-back rate cut by the central bank since Monetary Policy Committee (MPC) was formed in late 2016. This is a second rate cut in a row after February 2019 rate cut of an equal margin. Taking both the rate cuts together, the repo rate has come down by 50 basis points.
"On the basis of an assessment of the current and evolving macroeconomic situation, the MPC at its meeting today decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.0 per cent from 6.25 per cent with immediate effect," the central bank said in a statement.
(With inputs from agencies)