RBI retains economic growth forecast at 9.5 p c for FY '22

The Reserve Bank on Friday retained the GDP forecast for the current financial year at 9.5 per cent and flagged global semiconductor shortages, elevated commodity prices and potential global financial market volatility as downside risks to economic growth.In his address after the three-day meeting of the rate-setting panel, RBI Governor Shaktikanta Das said recovery in aggregate demand gathered pace in August-September, and it is reflected in high-frequency indicators, like railway freight traffic; port cargo; cement production; electricity demand; e-way bills; GST and toll collections. He said the economic growth is projected at 7.9 per cent in the second quarter; 6.8 per cent in third quarter and 6.1 per cent in January-March quarter of 2021-22. Das also said improvement in government capital expenditure, together with congenial financial conditions, could bring about an upturn in the much-awaited virtuous investment cycle.
"The ebbing of infections, together with improving consumer confidence, has been supporting private consumption," he said, and added the pent-up demand and the festival season should give further fillip to urban demand in the second half of the financial year. Das also said the improved level in reservoirs and early announcement of the minimum support prices for rabi crops has boosted the prospects for rabi production. The support to aggregate demand from government consumption is also gathering pace.The Governor said critical support to aggregate demand also came from exports, which remained in excess of USD 30 billion for the seventh consecutive month in September 2021, reflecting strong global demand and policy support. Further, recovery in the services sector is also gaining traction