RBI: FY2021/22 GDP revised lower – UOB

Economist at UOB Group Barnabas Gan comments on the recent RBI event.

Key Quotes

“The Reserve Bank of India (RBI) kept its policy repo rate and reverse repo rate static at 4.00% and 3.35% respectively in its June’s monetary policy meeting, in line with market expectations. This is the sixth time that the RBI has kept its policy repo rate unchanged, following a 40bps cut during an unscheduled meeting on 22 May 2020.”

“Despite holding the benchmark rate unchanged, RBI’s tone in the governor’s statement is less positive when compared to the April’s bi-annual monetary policy report.”

“Owing to the exacerbated COVID-19 risks, RBI has downgraded India’s FY2021/22 GDP growth outlook to 9.5%, down from a previous forecast of 10.5%. Across the quarters, RBI is expecting year-on-year growth of 18.5% in Q1, 7.9% in Q2, 7.2% in Q3 and 6.6% in Q4.”

“India’s growth prospects will depend largely on how COVID-19 evolves. We remain concerned over the renewed surge in COVID-19 cases, which in turn could inject a considerable downside risk to RBI’s GDP growth outlook of 9.5% in FY2021/22.”